The median price of a luxury property in the Greater Toronto Area (GTA), Greater Montreal Area (GMA) and Ottawa saw healthy price appreciation over 12 months, ending Jan. 31, compared to the previous 12-month period. GTA luxury condominiums posted the highest year-over-year price appreciation, rising 10.2 per cent to $2,268,571, followed by GMA luxury condominiums, which rose 8.4 per cent to $1,295,401.
“For a second year in a row, luxury condos in Toronto and Montreal have made significant gains in price appreciation and we expect this trend to continue through 2019, however, at a more modest pace in Toronto,” said Kevin Somers, Royal LePage Real Estate Services chief operating officer.
Across Canada’s five largest cities, Greater Vancouver was the only city to post a decline in median luxury home prices. The number of luxury houses trading hands declined over the past two years, a trend that initially began with the introduction of measures to cool the city’s real estate market in 2016. Luxury-home values have dipped but remain remarkably steady as many Vancouverites refuse to sell at what they perceive as a discount. Exasperating soft demand, Chinese nationals, an important luxury buyer demographic, have seen restrictions placed on their ability to transfer wealth to Canada.
While sales remained low throughout 2018 in Greater Vancouver, luxury house sales in the Greater Toronto Area decreased a more modest 3.6 per cent year-over-year from June 1, 2018 through Jan. 31, 2019. However, as a result of low sales activity during the 2018 spring market, luxury house sales in Greater Vancouver and the Greater Toronto Area declined 50.5 per cent and 40.0 per cent, respectively, during the twelve month period ending Jan. 31, 2019. During the same period, luxury condominium sales in Greater Vancouver decreased 32.2 per cent, while luxury condominiums in the Greater Toronto Area decreased 3.4 per cent.
“Compared to last year, we are expecting an increase in luxury sales activity in both Greater Vancouver and the Greater Toronto Area,” said Somers. “Price reductions and increased selection in Greater Vancouver are expected to stimulate the luxury property market while an expected return to more normal activity in the Greater Toronto Area will be a marked improvement over last year’s spring market.”
The median price of a luxury condo in the GTA outpaced luxury houses and condos in Canada’s five largest cities; Significant year-over-year decline in luxury house sales was limited to the 2018 spring market.
Luxury house prices in the Greater Toronto Area returned to healthy gains, indicating that the effects of measures targeting foreign buyers within the Ontario Fair Housing Plan have now been absorbed by the luxury property market. While foreign buyers represent a small segment of buyers in the GTA, the introduction of the measures had stifled consumer confidence among local buyers dampening house prices.
The median price of a luxury house rose 3.1 per cent to $3,575,702 year-over-year during the twelve-month period ending Jan. 31, 2019 compared to the same period the previous year. Meanwhile, the median price of a luxury condominium surged 10.2 per cent year-over-year to $2,268,571 during the same period, which was the highest median price gain seen in both luxury housing types across Canada’s largest five cities.
“While demand for luxury houses softened last spring, demand for luxury condominiums remained consistent and strong,” said Elli Davis, Royal LePage sales representative. “This demand quickly put upward pressure on luxury condo prices because the inventory for luxury condo buyers isn’t there. We have a shortage of luxury three-bedroom listings with the finishes and amenities that buyers are looking for.”
Luxury house sales for the full twelve-month period showed a stark contrast leading up to and during the spring market compared to the remainder of the year, while luxury condominium sales remained fairly consistent compared to the prior year. For the twelve months analyzed, luxury house sales decreased 40.0 per cent, however, when examining sales from June 1, 2018 to Jan. 31, 2019 to the same period the year prior, sales decreased a more modest 3.6 per cent. For the full twelve-month period, luxury condominium sales decreased 3.4 per cent compared to the year prior.
“Toronto’s luxury home market has regained its momentum and we are expecting a more active spring market than last year with the exception of a few quiet pockets,” said Davis. “Generally speaking, demand for luxury property is stronger in the City of Toronto compared to its surrounding areas.”
When looking to the next twelve months, the median price of a luxury house in the Greater Toronto Area is forecast to increase 3.2 per cent year-over-year to $3,691,700, while the median price of a luxury condominium is forecast to increase 5.4 per cent to $2,390,405 at the end of January 2020. Luxury house sales are expected to benefit from a more active spring market while luxury condominium sales are expected to be consistent with the year prior.
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Photo: Royal LePage forecasts healthy price appreciation for luxury real estate in the Greater Toronto Area, Greater Montreal Area and Ottawa. CNW Group/Royal LePage photo