Canada’s luxury property market going strong as buyers benefit from lower prices: Re/Max

Activity in most of Canada’s luxury home markets is ramping up, with buyers benefitting from lower prices, according to a Re/Max Canada report released today.

It notes that despite a disconnect between buyers looking for deals and sellers’ price expectations, nearly all 10 regions studied had a strong start to 2024. 90% of the markets studied saw an increase in sales of high-end products, with double digit growth in two-thirds.

The report explains the lower overall property values and strong equity gains that are driving luxury property demand.

Saskatoon grew the most in luxury sales; Ottawa declined

Saskatoon topped the list in terms of percentage gains with a 57 percent jump, followed by Montreal, at almost 56 percent, and Calgary, at 52 percent. Edmonton saw an increase of 32 per cent, and Winnipeg saw gains as well.

Ottawa was the only market studied with a decline compared to year-ago levels — its luxury sales were down almost eight per cent.

“While figures remain off peak levels reported during COVID, the upswing in luxury sales signal a return to overall health in the country’s major centres,” Re/Max Canada president, Christopher Alexander, indicates.

“The ripple effect is already underway, with stronger home-buying activity at lower price points pushing sales into the upper end. In some cities where inventory levels are particularly challenging at the lower end, multiple offers have returned with a vengeance. While that isn’t the case at the top end, pent-up demand does exist, and activity is gaining momentum.”

Source: Re/Max Canada

There is a growing demand for luxury properties despite a chronic shortage

Despite the fact that most markets have plenty of inventory, some neighbourhoods are experiencing a shortage at certain price points. Although the spring market is expected to bring renewed interest in new properties, chronic issues with supply of entry-level luxury products will likely persist.

“Equity continues to play a significant role in the marketplace, driving demand at the top end of the market,” explains Alexander. “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.

For example, in Greater Toronto, buyers who purchased homes in 2018 at an average cost saw equity increase by almost 43% by the year 2023. These buyers are coming to the table with a larger downstroke and reduced risk from a lending perspective.”

More younger buyers, fewer foreign buyers

Younger buyers are moving into the market’s upper end, with demand strongest for newer, turnkey properties in traditionally popular areas. Once again, people want more space and less congestion and density — acreage properties with large homes are making a comeback in London, Ottawa, Edmonton and Saskatoon, while new builds are gaining traction in half of the analyzed markets.

Foreign buyer activity in Toronto, Metro Vancouver and other expensive markets has decreased dramatically since the ban in January 2023. But those who want to increase their buying power in these markets (like Toronto, British Columbia or British Columbia) are looking for smaller centres like London or Alberta.

“While the idea of a Foreign Buyer Ban sounds good in principle, it makes less sense in practice,” says Alexander. “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.”

Alexander says that the spring market is picking up and there are challenges to overcome. “Despite the uptick, we’re still seeing some factors constraining sales at luxury price points. Most significant is the tax implications at the uber-luxe levels, which have been weighing down the segment, particularly in the Greater Toronto Area.”

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