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 per cent of markets saw an increase in high-end sales, with double-digit growth in over two-thirds of them.

The report explains that luxury property demand is being driven by lower overall property values, strong equity gains and downward trending interest rates.

Saskatoon saw highest gain in luxury sales, Ottawa declined

In terms of percentage gains, Saskatoon led with a 57 per cent jump in luxury home sales, followed by Montreal at almost 56 per cent and Calgary at 52 per cent. Edmonton saw a 32 per cent increase, and Winnipeg, Halifax, Toronto and London saw notable gains, too.

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

More properties and interest amid chronic low supply of entry-level luxury product

Most markets hold plenty of supply, though some neighbourhoods are experiencing exceptionally low inventory levels at sought-after price points. Though the spring market will bring renewed buyer interest in new properties, chronic supply issues of entry-level luxury product 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 the Greater Toronto market, buyers who purchased homes at an average price in 2018 saw equity rise by almost 43 per cent by the end of 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 has fallen drastically since the January 2023 Foreign Buyer Ban, particularly in Toronto and Metro Vancouver, but those in pricier markets (like Toronto or British Columbia) hoping to expand their buying power are looking in 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 points out that buyer enthusiasm is present as the spring market picks up, but challenges remain. “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.”

Read the full report, including market-by-market overviews, here.