Sales of luxury properties fell in three of Canada’s largest cities in 2018, as homebuyers struggled with rising interest rates and tightened mortgage guidelines, according to a report by Sotheby’s International Realty Canada.
In a widespread evaluation released Wednesday, Sotheby’s examined the high-end housing markets in Vancouver, Calgary, Toronto and Montreal, seeing a significant dip in all markets except for Montreal.
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According to Sotheby’s, Toronto saw a large drop in high-end real estate sales, while Montreal’s luxury real estate market posted new records. On the West Coast, Calgary and Vancouver’s top-tier real estate markets retreated further into “buyers’ market territory” as excess supply continued to overtake consumer demand.
“Canada’s top-tier real estate market performance was dominated by Eastern Canada’s two largest metropolitan areas in 2017,” said Brad Henderson, President & CEO, Sotheby’s International Realty Canada.
He also noted that both Calgary and Vancouver were vulnerable to a further decline in the coming years.
Sotheby’s reported sales of Calgary homes priced at $1-million or more dropped 10% in 2018 compared to 2017, backtracking on gains made in the previous year.
Looking at the specific types of real estate found that $1-million-plus single-family homes declined by 9%, and $1-million-plus attached homes dropped an astounding 39%.
According to Sotheby’s, the 2018 drop in sales was due in part to Alberta’s struggling economic recovery, which has been hurting since the drop in oil prices during the last months of the year.
Even as the number of luxury homes being sold was dropping, however, top-tier inventory had been increasing as homeowners attempted to exit the market.
Sotheby’s predictions for the future of luxury real estate sales in Calgary look grim.
“As Calgary enters its third year of economic recovery in 2019, weaker oil prices, persistent access issues to global oil markets, and downgraded forecasts for investments, exports and GDP are contributing to a somber outlook,” the release states.
“The city’s conventional and luxury real estate markets continue to favour buyers in the year ahead.”
– With files from Ainsley Smith