A recent report from Engel & Völkers indicates that Canada’s premium markets of Halifax, Montréal, Ottawa, Toronto and Vancouver are adjusting and moving closer to normal conditions. 

Here are the top national trends affecting these large, premium markets.

A new adjustment for markets this year

Company experts expect the markets will adjust by this year’s fourth quarter. The main reasons for the change are costs of construction, rising interest rates and home price depreciation (or stagnancy). The company says that now, Canadians are mainly driven to buy real estate by lifestyle changes (like downsizing, upsizing or changing jobs or cities) rather than investment opportunities.

Buyers wait for Bank of Canada rate cuts

The Bank of Canada is expected to begin lowering interest rates as soon as April of this year. If mortgage rates drop even slightly, Engel & Völkers market experts forecast a release of pent-up demand from waiting buyers. This demand will compound to fuel markets and drive up home prices.

Low supply to outpace short-term affordability relief

Experts say that those waiting in the wings for more market stability are at risk of passing by some of the best conditions we’ve had in years.

Short-term affordability will peak because of less competition and more inventory, offering unique investment opportunities and a dynamic market. To keep affordable housing over the long term, the Canada Mortgage and Housing Corporation (CMHC) expects the country will need about 3.5 million more housing units by 2030.

National overview

The country’s luxury real estate markets experienced stability throughout 2023. Now, Canada’s plans to invest billions in building new homes will help to raise construction employment, address short-term rentals and create green investments through tax credits. 

The federal government plans to incentivize rental housing construction with up to $15 billion in new loan funding beginning in 2025-26. This “Apartment Construction Loan Program” represents an existing initiative announced with billions in support already.

The Realtor Cooperation Policy took effect on January 1. It requires publicly-marketed properties to be listed on MLS within three days of any public marketing and prohibits exclusive listings.

Key Canadian luxury markets overview

Here’s how each market is doing and what its local experts had to share.

Halifax

Halifax saw 16 per cent less in sales exceeding $1 million in 2023. However, its average sales price was 13 per cent higher than in 2022.

“We are not seeing price declines despite a sluggish market, but negotiations are possible. Price averages continue to trend upward due to supply shortages, and there is a decrease in multiple offers in the $1 million and higher segment. We advise interested buyers to take advantage of the current market conditions,” says Donna Harding, license partner of Engel & Völkers Nova Scotia.

Montreal

Montreal’s sales of units valued at $1 million to $3.99 million declined by 12 per cent annually, but average prices went down by just 0.62 per cent.

“Demand for move-in ready freehold homes is high, with prime inventory often receiving multiple offers within 24 hours of listing. A record number of immigrants continue to move to Québec. Many settle in central areas, and we expect strong market demand through 2030 as they move through the real estate cycle, starting with renting,” explains Patrice Groleau, license partner of Engel & Völkers Montréal.

Ottawa

Ottawa had two properties sell for over $6 million — a first since 2014. This caused a 24 per cent increase in average prices for homes over $4 million.

“Ottawa’s adjustment period will continue into spring 2024, but I don’t anticipate dramatic price drops. Buyers will have selection and experience less pressure through the process. Sellers should have strong representation and understand days on market will be longer. They will need seasoned advisors on their team,” says John King, license partner of Engel & Völkers Ottawa Central.

Toronto

Toronto’s ultra-luxury market experienced over 50 per cent more sales above $8 million than it did in 2019, despite the foreign buyer ban and unfavourable market forecasts.

“We have observed a noticeable change in how homeowners are moving. Instead of buying first, homeowners are now selling first – attributed to growing days on market. Despite this trend, luxury real estate markets have remained remarkably stable, only recording a minor contraction,” notes Anita Springate-Renaud, license partner of Engel & Völkers Toronto Central.

Vancouver

Vancouver’s luxury market was quite stable last year in properties with $1 million to $3.99 million home price averages.

“Seek advice from professional market experts who understand they are not in the sales business; they are in the advice business. Their expertise comes in pricing home inventory correctly for a successful buy or profitable sale. Working with the right advisor will help you maximize your transaction and gain in the long run,” advises Andrew Carros, license partner of Engel & Völkers Vancouver.

Read the full report here, including detailed market summaries.