Canadian Luxury Property Sales Dropping

The boom in Canadian luxury property sales appears to be over as sharp falls have been registered in the more expensive areas.

According to the latest report just released by Sotheby’s International Realty Canada. Sales of homes above C$1 million (S$1.03 million) fell 46 per cent in Toronto and 19 per cent in Vancouver year-on-year.

The number of Canadian Luxury Property Sales priced at above C$4 million fared even worse, dropping by 51 per cent in Toronto and 47 per cent in Vancouver.

The decline in Canadian luxury property sales follows a wave of lending constraints and taxes implemented by both the federal and provincial governments to tame soaring prices fueled by speculative purchases.

Brad Henderson, president and CEO of the Sotheby’s unit, said in a statement that the collision of rising mortgage rates, stricter lending guidelines and cascading governmental policies and taxes have hurt a number of important Canadian markets.

The sales of condominiums stayed strong in Vancouver, as homebuyers who were priced out of detached houses turned toward the high-rise alternative. Sales of condos above C$1 million rose 9 per cent in the first six months of the year from the same period in 2017, and 35 per cent for condos above C$4 million.

Henderson said: ‘There’s a belief that condos, in particular new condos, are going to continue to be a good investment notwithstanding some of the interim policy measures, and that the market will be able to absorb it and to move on.’

This was not reflected in the Toronto market however, where sales of condos above C$1 million dropped 13 per cent to 658 units, and sales of condos over C$4 million slumped even more, down 40 per cent.

The only area to see a rise in Canadian luxury property sales was Montreal, with properties above C$1 million jumping 24 per cent to 460 sales. The market in Montreal was protected from the sort of provincial and municipal policies used in Toronto and Vancouver to control prices.

Overseas property investors may wish to spread their search a little wider in Canada.