Despite speculation that Vancouver’s red hot housing market will cool in 2016, a new report suggests the luxury segment will continue to see strong growth.
Sotheby’s International says sales of homes over $4 million in Metro Vancouver have grown 67% year-over-year, and sales of homes over $1 million increased 23% in the first two months of 2016.
Sales of luxury homes are expected to remain strong heading into the spring, according to the real estate company. Low supply, high demand, and investors from mainland China will all contribute to the upward momentum of this segment of the real estate market.
“Affordability is projected to be a critical concern: with other market influences taking precedent, recent policy measures introduced by the provincial government with the February 2016 BC Budget are not expected to dampen the top-tier real estate market in 2016,” reads the report.
The increased demand for luxury housing might have a trickle-down effect. As more Vancouverites are pushed out of the detached home market, demand for million dollar condominiums and attached homes is expected to rise.
Toronto, however, is expected to lead the pack nationally for luxury home sales, fuelled largely by an “acute shortage of inventory” in the city’s prime neighbourhoods and strong confidence in the housing market. The first two months of 2016 saw sales volume gains of 63% year-over-year.
Calgary’s luxury housing market will favour buyers amid volatile oil prices, although there’s the potential to see an uptick in sales.
The growth in Vancouver’s luxury housing market is already having an effect. A home on a standard lot in Kitsilano recently broke local records after selling for $735,000 over its asking price of $3.5 million. Thomas Davidoff from UBC’s Sauder School of Business told Vancity Buzz he believes our market is a “ridiculous joke.”
“This is not a locals’ market. The incomes here just don’t support it,” says Davidoff.
To read more of Sotheby’s International’s 2016 predictions, click here.