Inventory essentially "evaporated" from the Canadian luxury housing market in Q3, says a new report
Canada’s luxury housing segment continues to transition from an era of “pandemic over-exuberance”, particularly in markets that saw the greatest acceleration over the past two years, according to Sotheby’s International Realty Canada.
“Sellers and buyers continue to process the impact of interest rate hikes, rising inflation, volatile financial markets and geo-political headwinds, and many remain watchful from the sidelines,” Sotheby’s said in its new analysis.
It noted that inventory essentially “evaporated” from the Canadian luxury housing market in the third quarter of the year, “leaving pent-up local demand for top-tier housing and housing mobility unfulfilled.”
This was especially apparent in the Greater Toronto Area, which saw a 42% annual deceleration in residential real estate sales valued at more than $4 million during Q3. Sales valued at more than $1 million also declined by 39%.
“Preliminary fall data foreshadows a tempered market ahead, as luxury sales over $4 million in the GTA were down 63% year-over-year from September 1-30 as the $10 million-plus market, which saw three properties sold last September, remained quiet on MLS,” Sotheby’s said. “Overall residential sales over $1 million saw an annual decline of 52% in the month of September.”
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In Vancouver, luxury home sales valued at more than $4 million continued to fall from “historic highs” with a 51% annual drop in July and August, followed by a 58% year over year decline in September.
“The city’s ultra-luxury $10 million-plus market, however, remained active with two sales recorded on MLS from September 1-30 compared to one property sold in this price range during the same period last year,” Sotheby’s said.
Don Kottick, president and CEO of Sotheby’s International Realty Canada, said that the chronic lack of supply would likely continue to dominate market dynamics in these regions for the foreseeable future.
“Given high levels of local demand, population gains, as well as needs for housing mobility with changing lifestyle and generational needs, this foundational inventory shortage will support housing values and challenge affordability until the gap is closed,” Kottick said. “Demand-side policies and taxes, including bans and taxes on foreign buyers, will offer little benefit, while creating unintended consequences when Canada is striving to attract and retain people with desperately needed skills and talent.”
