Following the pandemic-induced buying and selling frenzy, Canada’s luxury market continued to fall from historic highs over the third quarter (Q3) of 2022 as inventory faded across the country’s biggest markets.
According to Sotheby’s International Realty Canada’s Top Tier Real Estate: Fall 2022 State of Luxury Report, Canada’s most sought-after postal codes saw muted sales activity over the summer months and into the initial weeks of fall, with fewer homes listed for sale from Jul. 1 to Aug. 31.
“The market is still absorbing the effects of rapid-fire interest rate hikes, as well as changes in the domestic and global economic landscape, and real estate sellers and buyers are taking a step back to strategize,” says Don Kottick, president and CEO of Sotheby’s International Realty Canada, in a press release.
“It is critical to note, however, that the primary challenge within major metropolitan housing markets, particularly in Toronto and Vancouver, is a chronic undersupply of housing,” Kottick adds. “Demand-side policies and taxes, including bans and taxes on foreign buyers, will offer little benefit while creating unintended consequences when Canada is striving to attract and retain people with desperately needed skills and talent.”
According to Kottick, prices are stabilizing, and prospective buyers and investors are no longer willing to pay bullish prices.Properties priced correctly for current market conditions are seeing activity and sales; those priced too ambitiously are languishing on the market.
The Greater Toronto Area:
- Residential sales over $4 million fell 42 per cent year-over-year.
- Three properties sold for more than $10 million on MLS, compared to six units the previous summer.
- Overall, residential sales over $1 million declined 39 per cent in the summer of 2022.
- Preliminary fall data foreshadows a tempered market ahead, as luxury sales over $4 million in the GTA were down 63 per cent in September year-over-year between Sept. 1 to 30.
- The $10 million-plus market, which saw three properties sold last September, remained quiet on MLS.
- Overall residential sales over $1 million saw an annual decline of 52 per cent in September.
- From Jul. 1 to Aug. 31, luxury residential sales over $4 million fell 51 per cent from the record summer of 2021.
- Two properties sold over $10 million on MLS compared to one sold in the summer months of last year.
- $1 million-plus residential sales were down 37 per cent year-over-year overall during this time.
- Luxury sales in September signal a return to moderated levels of market activity, as residential sales over $4 million receded 58 per cent from September 2021 levels
- Sales over $1 million declined 70 per cent year-over-year.
- The city’s ultra-luxury $10 million-plus market, however, remained active, with two sales recorded on MLS between Sept.1 and 30 compared to one property sold in this price range during the same period last year.
- $4 million-plus residential real estate market, which saw sales volume increase 71 per cent year-over-year in the first half of 2022 to new highs, gradually tapered to balanced conditions in the third quarter of 2022.
- From Jul. 1 to Aug. 31, $4 million-plus residential sales remained relatively stable with a nominal decline to eight transactions compared to nine in the previous summer levels.
- Sales over $1 million were down 26 per cent year-over-year.
- Luxury sales in the city in September reflect a market coming into balance with two properties sold over $4 million between Sept. 1 and 30 compared to six sold in the same month last year.
- Overall, September sales of over $1 million were down 39 per cent.
- Residential sales over $1 million remained stable over the summer with a mild 12 per cent year-over-year contraction in sales volume between Jul. 1 and Aug. 31.
- One property sold for more than $4 million over the summer, on par with the summer of 2021.
- In September, sales over $1 million remained largely comparable with September 2021 levels, with sales tightening five per cent.