Earlier this month, Sotheby’s International Realty Canada released its 2018 Mid-Year Top-Tier Real Estate Report, highlighting sales activity of $1 million+ and $4 million+ homes in major markets.
“The collision of rising mortgage rates, stricter lending guidelines and cascading governmental policies and taxes have impacted the performance of several top-tier Canadian markets,” says Brad Henderson, President and CEO of Sotheby’s International Realty Canada. “While the Toronto top-tier market remained remarkably resilient in the first half of 2018, and Montreal continued to exude growth and confidence, the Vancouver and Calgary markets decelerated as consumer optimism and local purchasing power diminished.”
In the Greater Toronto Area, sales activity showed signs that luxury homebuyers are recovering psychologically from the effects of the Fair Housing Plan, which was introduced by the province of Ontario in April 2017 to cool the market.
From 2015 to 2017, there were consecutive year-over-year surges in the number of top-tier home sales in the GTA. The first half of 2017 reported record high top-tier sales. For home sales over $1 million, sales decreased 46% to 7,684 in the first half of 2018 compared to the first half of 2017. Sales over $4 million fell 51% with 127 transactions.
These drops may seem big, but Sotheby’s makes a good point, highlighting the fact that 2018 luxury sales are more in line with pre-surge 2015 levels. Compared to the first half of 2015, 2018 luxury sales are up 25% for sales over $1 million and up 72% for home sales over $4 million.
In the City of Toronto, there were 3,526 sales over $1 million in the first six months of the year, which is a 32% drop compared to 2017. There were 91 sales over $4 million, a drop of 52% compared to the same period last year. Again, compared to pre-surge levels in 2015, sales over $1 million were up 14% and up 44% for sales over $4 million.
Condo prices in the GTA are still on the rise as supply struggles to keep up with demand. But, top-tier sales are down for the first half of the year compared to the record highs of last year. Condo sales over $1 million fell 13% with 658, and there were only nine sales over $4 million, which is 40% lower than last year.
The only major market in Canada to experience a year-over-year increase in sales over $1 million was Montreal, with a jump of 24%. Condo supply is struggling to keep up, so there’s been an influx of bidding wars recently. While Montreal’s top-tier market is performing well, Sotheby’s says there are signs of a slowdown for the second half of 2018.