RE/MAX Canada says luxury home sales are booming by double-digits across Canada, but remain below the COVID-19-era peak.
Saskatoon had Canada’s fastest-growing luxury market in the first two months of 2024, the realtor says in a new report released on Tuesday. With luxury real estate starting at $700,000, RE/MAX says sales climbed more than 57 per cent versus 2023 due to a healthy economy, plus an influx of new Canadians and out-of-province buyers.
In Montreal, where luxury real estate starts at $2.5 million, sales grew 56 per cent. In Toronto and Vancouver, where luxury inventory costs north of $3 million, sales rose 14 per cent and three per cent, respectively.
“The upswing in luxury sales signal a return to overall health in the country’s major centers,” RE/MAX Canada president Christopher Alexander states in the report. “The ripple effect is already underway, with stronger home-buying activity at lower price points pushing sales into the upper end.”
Ottawa was the only city included in the report to book a decrease in luxury real estate sales. The number of transactions there fell eight per cent versus the first two months of 2023. RE/MAX says fewer homes in the nation’s capital were listed for sale at the top of the market early this year.
Nationwide, RE/MAX says strong equity gains, lower overall values, and downward-trending interest rates are supporting demand for luxury homes.
“Equity continues to play a significant role in the marketplace, driving demand at the top end of the market,” Alexander added. “Although overall gains have been elusive in recent years, a good percentage of buyers who purchased in 2018 and 2019 are well positioned to make their next moves.”
Foreign buyer activity falls
RE/MAX says the federal government’s ban on foreign ownership of Canadian real estate has had a “palpable” impact on the uber-luxe segment of major markets, as activity dropped “dramatically.” These markets include Metro Vancouver and Toronto, as well as the condo market in Montreal.
Last month, Ottawa announced a two-year extension of the ban, to Jan. 1, 2027.
“While the idea of a Foreign Buyer Ban sounds good in principle, it makes less sense in practice,” Alexander states. “The ban was originally intended to make a greater number of properties available to Canadians, and reduce upward pressure on housing values. The Bank of Canada’s 10 rate hikes were all that was needed to achieve that objective, all the while supply remains at historical lows.”
Young money
Luxury home-buying is skewing younger, according to RE/MAX. In Saskatoon, the report says young professionals working in the oil and gas industry are buying properties with acreage on the outskirts of urban areas. In larger cities, luxury condos are a popular choice.
RE/MAX say the luxury condo market is strongest in Metro Vancouver. Condo sales in that city climbed nearly 70 per cent in the first two months of 2024, according to the report.
Looking ahead, Alexander calls for thriving luxury real estate markets from coast-to-coast, barring an economic sea-change.
“Assuming a continuation of current economic fundamentals, momentum is set to climb at luxury price points,” he states.
“Demand is coming from a mix of high-income professionals/executives, retirees, empty-nesters, Gen X and millennials, newly landed immigrants, as well as large and multigenerational families – a good sign, as the diversity of buyers at the top end of the market today bodes well for its overall health in the future.”
Last month, a report by Royal LePage called for resurgent demand in Canada’s recreational housing market, following a post-pandemic slowdown in sales.
“Fundamental demand for recreational living has not abated,” said Royal LePage CEO Phil Soper. “Demand has been building quietly on the sidelines.”
Canada on Sunday announced a two-year extension to a ban on foreign ownership of Canadian housing, saying the step was aimed at addressing worries about Canadians being priced out of housing markets in cities and towns across the country.
Canada is facing a housing affordability crisis, which has been blamed on an increase in migrants and international students, fueling demand for homes just as rising costs have slowed construction.
“As part of using all possible tools to make housing more affordable for Canadians, the ban on foreign ownership of Canadian housing, which is currently set to expire on January 1, 2025, will be extended to January 1, 2027,” Canadian Deputy Prime Minister Chrystia Freeland said in a statement.
The Canadian government has said foreign ownership also has fueled worries about Canadians being priced out of housing markets in cities and towns across the country.
Last month, Canada announced an immediate, two-year cap on international student permits and said it would also stop giving work permits to some students after graduation as it seeks to rein in record numbers of newcomers seen aggravating a housing crisis.
Rapid population growth fueled by immigration has put pressure on services such as healthcare and education, and has helped drive up housing costs. These issues have weighed on Liberal Prime Minister Justin Trudeau’s support, with opinion polls showing he would lose an election if one were held now.