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Sales volume in luxury market holding, despite national drop: Engel & Völkers

Luxury markets in Canada are holding their value, but prices are adjusting downwards from their inflated values in some areas, according to a new report from Engel & Völkers.

The real estate company is releasing its 2022 Year-End Luxury Real Estate Report, featuring key findings based on data for homes priced over $1 million in Canada’s most in-demand metropolitan real estate markets — Halifax, Montreal, Ottawa, Toronto and Vancouver. 

According to the report, the “market normalization trend” established in the first half of 2022 continued across the country. 

Repeated interest rate hikes triggered market normalization, bringing balanced conditions to Canada’s real estate markets, according to Engel & Völkers. 

As a result, price growth has plateaued or declined in some areas, with the most significant declines seen in the conventional market, especially in periphery markets that saw exponential growth amid the global pandemic.

However, the company notes that well-located, quality inventory continues to increase in value year-over-year, although the growth rate has slowed.

Anthony Hitt, President and CEO of Engel & Völkers Americas, said in a press release, “We find interest rate increases are not as disruptive to the ultra-premium markets, as these buyers tend to purchase homes with much of the equity paid upfront. We expect luxury markets to remain stable in Canada, as real estate remains an attractive investment.”

The report predicts that the return of a “bustling real estate” market will occur between the second and third quarters of 2023, with price increases possible if low supply is not addressed.

“Moving into 2023, market fluctuations will be less dramatic as buyers and sellers acclimatize to stable market conditions,’ the report states. “When stability returns, would-be buyers and sellers will feel comfortable making transactions in the market again.”

 

Regional highlights

 

Halifax’s luxury real estate market grew in 2022. In 2021, homes priced over $1 million accounted for 2.6 per cent of all units sold. In 2022, this number grew to 4.5 per cent. Condo units sold priced between $1 million and $3.99 million also grew, from 13 units in 2021 to 20 in 2022.

Montreal’s market saw prices for all property types combined hold in the $1 million to $3.99 million range despite the sales volume dipping by 55 per cent in the second half of the year.

Ottawa’s $1 million-plus market was the only segment to see year-over-year growth in sales volume. This segment accounted for 12 per cent of all units sold in 2021, up from nine per cent from the year prior.

Toronto’s 2022 sales volume of condos priced between $1 and $3.99 million is up 71 per cent from 2020, but down by 18 per cent from 2021.

Vancouver saw accelerating demand for condos, particularly for units priced between $1 and $3.99 million. In this segment, units sold increased by 95 per cent year-over-year, with 62 per cent of all sales occurring in the first half of the year.

Read the full 2022 Year-End Canadian Luxury Real Estate Market Report.

 

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