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, with Eastern Canada’s major metropolitan areas leading the nation in top-tier real estate performance in 2018.
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. Toronto’s top-tier real estate market emerged as a bastion of resilience, due in large part to the region’s stable economy and rapidly expanding population,” says Brad Henderson, President & CEO, Sotheby’s International Realty Canada.
“Consumer psychology bounced back from temporary setbacks brought on by policy changes, rising rates and tighter lending guidelines,” says Henderson.
Sotheby’s reported sales of Greater Toronto Area (GTA) homes priced at $1-million or more dropped 31% in 2018 compared to 2017, while the $4-million plus market saw a 40% year-over-year drop.
Here in Toronto, sales of homes over $1-million fell 19%, while sales of over $4-million and more dropped 39%.
According to Sotheby’s, the figures in Toronto were drastic because the report compared “uncharacteristically soft sales” in the first quarter of 2018 when a number of housing policy changes came into effect with a “record-setting performance” of the first quarter of 2017.
The report also found that Toronto’s luxury real estate market picked up traction toward the end of 2018, a sign that it is still “buoyed by population gains and a steady economy.”
“While demand for limited top-tier inventory sparked multiple offer scenarios, subject-free deals and sales above list price in prime neighbourhoods within the City of Toronto, the heated bidding wars endemic in past years calmed,” said the release.
“In 2018, as the GTA market balanced, fatigued buyers were more likely to withdraw from overpriced listings or unnecessary competition.”