Unprecedented population growth is dramatically changing Canada’s conventional and luxury real estate market, according to Sotheby’s International Realty Canada’s Top-Tier Real Estate: 2024 Mid-Year State of Luxury Report.

Statistics Canada data reveals that all major Census Metropolitan Areas (CMAs) experienced their fastest growth since 2001-2002 in the year ending July 1, 2023. Calgary led with a 5.9 per cent growth rate, followed by Edmonton and Vancouver at 4.1 per cent, Toronto at 3.3 per cent and Montreal at 2.9 per cent.

Interprovincial & interregional migration: Key indicators of local economic confidence & consumer sentiment

Experts from Sotheby’s note that interprovincial and interregional migration trends are key indicators of local economic confidence and consumer sentiment, influencing both conventional and luxury housing markets.

The Vancouver CMA experienced its largest net loss to interprovincial migration in over 20 years, losing 4,795 people, and all Ontario CMAs, including Toronto, saw net losses in interprovincial migration. Alberta surpassed British Columbia in net interprovincial migration gains, with Calgary leading the CMAs, gaining 26,662 people. Toronto, Montreal and Vancouver continued to see significant net losses to regional migration.

Performance by city

Toronto’s luxury real estate market, supported by a population gain of 221,588 people, beat economic challenges to maintain steady activity in the first half of 2024. Despite higher interest rates, economic uncertainty and housing taxes and regulations, the GTA saw a modest 8.0 per cent year-over-year increase in residential real estate sales of over $4 million. However, sales over $1 million fell by 10 per cent. Within the City of Toronto, $4 million-plus sales rose by 4.0 per cent, but sales over $1 million dropped by 7 per cent.

Calgary’s real estate market reached new heights in the first half of 2024, driven by immigration and record inter-provincial migration. With a 6 per cent population surge and an influx of 95,784 people, competition for limited listings intensified, resulting in a 46 per cent year-over-year increase in high-end residential sales of over $1 million. Sales of homes over $4 million saw a 75 per cent annual gain.

Montreal’s luxury market remained balanced in the first half of 2024, with $4 million-plus residential sales up 29 per cent and $1 million-plus sales rising 25 per cent year-over-year. Homebuyers and investors took their time navigating the market, extending home searches and negotiations.

In contrast, Vancouver’s luxury market activity dropped. From January to June, luxury residential sales over $4 million fell by 16 per cent, and sales of ultra-luxury properties over $10 million dropped by 50 per cent. Despite a 27 per cent gain in $4 million-plus condominium sales, demand for luxury condominiums remained soft. The net loss of 18,399 people from the Vancouver CMA to other regions of B.C. dampened demand for housing.

Migration from larger to smaller communities foreshadows trends in sales, prices & market performance

“While record-setting population gains in Canada’s largest metropolitan areas continue to be powerful influences on the local real estate market, interprovincial and interregional migration patterns are now leading signals for local economic sentiment, core housing demand and conventional and luxury real estate market performance overall,” says Don Kottick, president and CEO, Sotheby’s International Realty Canada.

“The migration of residents and their talent and financial capital away from cities like Toronto and Vancouver to communities in surrounding regions or to provinces such as Alberta foreshadow trends in sales activity, housing prices and real estate market performance. This applies to the cities they are leaving and the markets they are moving to, and it applies across the conventional and luxury markets.”

Kottick notes that elevated prices and interest rates continue to impact consumer decisions, leading to steady but subdued activity in most major metropolitan luxury real estate markets. However, Alberta’s major cities are outperforming due to record-setting population gains, increasing both conventional and luxury sales to new levels during the first half of the year.

Review the full report here.