It looks like the Greater Toronto Area’s luxury home market will be strong this year compared to 2018, according to a new report from Royal LePage.
Royal LePage’s findings focus on the GTA, Montreal, Ottawa, Vancouver, and Calgary. Different thresholds were used for each market to identify a “luxury” home. In the GTA, any house priced at $3,092,476 or higher was considered luxury. For condos, the threshold was $1,543,909.
"Compared to last year, we are expecting an increase in luxury sales activity in both Greater Vancouver and the Greater Toronto Area," says Kevin Somers, Chief Operating Officer, Royal LePage Real Estate Services Limited. "Price reductions and increased selection in Greater Vancouver are expected to stimulate the luxury property market while an expected return to more normal activity in the Greater Toronto Area will be a marked improvement over last year's spring market."
As of the end of January 2019, the median price of a luxury condo in the GTA was $2,268,571, which is a 10.2% year-over-year increase. This is also the greatest luxury condo price growth out of all five cities included in the report.
"While demand for luxury houses softened last spring, demand for luxury condominiums remained consistent and strong,” says Elli Davis, sales representative, Royal LePage Real Estate Services Ltd. “This demand quickly put upward pressure on luxury condo prices because the inventory for luxury condo buyers isn't there. We have a shortage of luxury three bedroom listings with the finishes and amenities that buyers are looking for.”
The median price of a luxury house in the GTA was $3,575,702, which is a 3.1% year-over-year increase. While luxury house prices rose, sales fell by 40% year-over-year. Royal LePage credits the introduction of the Ontario Fair Housing Plan, including the foreign buyers tax, for the decline in sales activity. After Royal LePage took spring 2018 out of the equation and measured June 1, 2018 to January 31, 2019, sales only declined by 3.6% year-over-year. Luxury condo sales fell by 3.4%.
Foreign buyers don’t actually play a huge role in the GTA’s luxury or conventional housing market, but the Fair Housing Plan hit consumer confidence pretty hard. A lot of would-be buyers stepped to the sidelines, causing sales and prices to drop.
"Toronto's luxury home market has regained its momentum and we are expecting a more active spring market than last year with the exception of a few quiet pockets," says Davis. "Generally speaking, demand for luxury property is stronger in the city of Toronto compared to its surrounding areas."
Royal LePage predicts that the luxury house median price will increase 3.2% over the next year to $3,691,700. They expect luxury condo prices to increase even more, jumping 5.4% to $2,390,405 by the end of January 2020.