Halifax is becoming one of Canada’s most important real estate markets to watch, according to a new report from Engel & Völkers.
The company’s mid-year 2023 Canadian Luxury Real Estate Market Report shares key findings based on data for homes priced over $1 million in Canada’s most in-demand markets. The report, which combines on-the-ground insights from local realtors with market data, reveals a story of sustained demand in the face of a shrinking pool of properties.
According to the report, Halifax has witnessed a significant rise in the market share of single-family homes priced over $1 million. In the first half of 2023, these luxury homes comprised close to 10 per cent of the market, compared to 4.6 per cent in 2022.
“Halifax’s population sat at 480,523 as of January, and we are on a trajectory to reach one million people by 2025. Of new residents to Halifax, 74.4 per cent were aged 15 to 44, the largest segment of this age group ever recorded,” says Donna Harding, license partner, Engel & Völkers Nova Scotia. “Many originate from Ontario, Vancouver and Alberta and have built home equity in these markets. This is translating into multiple offers in the $1 to 3.99 million market, as well as across the conventional market.”
While sales volume is down slightly, the average sold price for homes priced over $1 million grew by 3.2 per cent year-over-year. The report credits the strength in the market to limited inventory and consistent buyer demand.
Montreal, Ottawa, Toronto and Vancouver also seeing growth in the luxury market
“Quality inventory on the market has sold quickly, with homes commanding multiple offers, despite the current climate. Interest rate changes have had negligible effects on premium markets because buyers tend to pay a large portion of home equity upfront. The availability of luxury real estate in Canada continues to shrink…” says Anthony Hitt, president and CEO, Engel & Völkers Americas.
Montreal neighbourhoods, Westmount and Outremont, have seen a notable increase in average home values, with a rise of nearly $1 million over the past decade.
Ottawa’s luxury housing market has also experienced growth, with the value of homes priced between $1 million and $3.99 million increasing by three per cent from January to June 2023.
Toronto homes priced between $1 million and $3.99 million have seen a 3.7 per cent increase in average sold prices compared to the beginning of the year.
In Vancouver’s luxury home market, the price of homes in the $1 million to $3.99 million range has dipped 5.59 per cent from the peak in February 2022, which signals a resilient market, according to Engel & Völkers.
Hitt adds, “Premium markets are proving their resiliency to market fluctuations, showing steady growth and stability. This is in part due to sellers holding off on listing properties while real estate markets return to typical seasonal patterns.”
Intergenerational transfer of wealth
The report also highlights a growing trend in the Canadian luxury real estate market: the increase of real estate as a generational asset. Similar to European practices, intergenerational wealth transmission through family properties is gaining momentum in Canada. This trend is driven by factors such as limited property availability, unaffordable prices for first-time buyers, and inadequate inventory for downsizing baby boomers.
Baby boomers aid millennials in overcoming affordability challenges
Despite the desire to downsize, baby boomers are finding it increasingly challenging to find appropriate inventory to purchase, such as large condos or single-level bungalows. As a result, many are choosing to remain in their current homes. On the other hand, millennials, who are facing affordability challenges, are receiving financial support from their baby boomer parents. Instead of financing rent, parents are providing their children with significant sums of money for mortgage down payments and monthly payments. According to the report, this growing trend is driven by the belief that real estate is a stable and profitable investment, offering more long-term benefits than the stock market.
Land and labour shortages pose challenges to affordability
However, home affordability remains a persistent issue in major cities. One contributing factor is the shortage of available homes, exacerbated by a lack of buildable land in desirable locations like Montreal, Toronto and Vancouver. A recent study conducted by the Toronto Metropolitan University’s Centre for Urban Research & Land Development reveals a severe shortage of shovel-ready land for ground-related housing in the Greater Golden Horseshoe region. Additionally, the construction industry is grappling with a scarcity of skilled labour and trades, leading to project delays and increased costs for developers.
Foreign buyer ban impacting high-profile athletes and executives
The report also highlights another unintended consequence of Canada’s foreign homebuyer ban: the Prohibition on the Purchase of Residential Property by Non-Canadians Act, is having unintended consequences on high-profile professional athletes and executives. Despite the federal government’s amendments to allow some work permit holders to purchase homes and vacant land, provincial taxes, such as Ontario’s 25 per cent non-resident speculation tax, continue to create barriers for high-net-worth individuals, according to Engel & Völkers. As a result, many professionals are forced to rent instead of buying homes, potentially creating friction for organizations looking to attract top-tier global talent to Canada.
Read the full 2023 Mid-Year Canadian Luxury Real Estate Market Report.
Feature image: 11140 Highway 1, courtesy Engel & Völkers Nova Scotia
