Canada’s luxury sector shows ‘impressive resilience’

Canada’s luxury real estate segment has so far outperformed the broader market in some of the country’s largest cities in 2024, according to a half-year report from brokerage firm Engel & Volkers released this week.

In Toronto, prices for single-family homes above C$8 million ($5.8 million) rose 4.7 per cent in the first six months of the year compared with the same period in 2023, despite a slowdown in sales, according to the report. In the broader market, single-family home prices rose 1.3 per cent, while home sales across the board rose 1.1 per cent, according to a separate Royal LePage report released last week.

Toronto also saw a big increase in listings above $1 million in the first half of the year, which helped offset the chronically undersupplied market. But with mortgage rates still high, many buyers at that level are still waiting on the sidelines. In the first six months of the year, Toronto saw a total of 3,410 sales above $1 million, with less than half of the 7,259 new listings coming in that price range.

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The inventory reset was visible across Canada as buyers waited for the Bank of Canada’s expected rate cut in June, the first since the inflation crackdown began in earnest in 2022. That could help lower mortgage rates, but it could encourage buyers to wait out the market even further, according to the report.

In Toronto, the condo market has been particularly struggling with sales slowdowns as domestic investors have pulled out of the sector, leading to record inventory in May, when 8,183 condos came on the market, largely due to an oversupply of one-bedroom units built with investors in mind.

Other parts of Canada also saw growth in the luxury sector. In Vancouver, despite a similar slowdown in sales and an influx of new listings, prices for homes in the C$2 million to C$4 million range also rose 4.7%.

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Halifax was one of the few places where sales actually increased, with a 5% increase in the number of homes sold above the $1 million mark, for a total of 117 transactions. Sellers jumped on the bandwagon, and this spring, a cluster of new listings above the $1 million mark hit the market.

“Canadian luxury real estate markets have shown impressive resilience despite the slowdown in overall sales,” Anthony Hitt, president and CEO of Engel & Völkers Americas, said in a statement. “We anticipate that Canadian luxury real estate markets will remain stable as real estate continues to be an attractive and safe investment.”