"It really comes down to the two biggest markets, which are obviously Toronto and Vancouver. We're seeing a lack of supply and huge demand,” Ross McCredie, president and CEO of Sotheby's International Realty told MortgageBrokerNews.ca. “Most of it is coming for foreign buyers, especially for homes above $4-million while well-to-do baby boomers are buying up homes in the $1-million to $2-million range."
Toronto saw an increase of 56 per cent in sales of houses in excess of $1 million year-over-year while Vancouver enjoyed its own 48 per cent increase.
“Tightening inventory combined with heightened demand in both markets contributed to a greater proportion of properties sold above list price in both markets,” Sotheby’s wrote in its Top-tier Real Estate Report, released Thursday morning. The report focuses on sales made between January 1 and June 30 of this year.
However, not all market fared as well as Toronto and Vancouver when it comes to luxury real estate. The sheer shortage of supply in comparison with two of Canada’s most dominant markets has also to do with it, but recent events in the political scene has also shaped activity in the market.
"In Calgary many people are taking a wait and see approach due to the NDP government,” McCredie said. “We had the same government for more than 60 years and I think it's dawned on people that things have changed so they're waiting to see what's going to happen before diving in."
In total, only 289 properties were sold for over $1 million in Q1 of this year, a 36 per cent decrease year-over-year.
“Sales volume dropped across all price categories, with the $1–2 million, $2–4 million, and $4 million-plus categories decreasing 35 per cent, 43 per cent, and 50 per cent respectively,” Sotheby’s wrote.
For its part, Montreal reported fairly stable sales.
“Overall, sales above $1 million increased 20 per cent with a total of 274 properties (condominiums, attached homes and single family homes) sold from January 1 to June 30, 2015, compared to the 228 units sold during the same period in 2014,” Sotheby’s wrote.
Sales of homes in excess of $1 million were concentrated in two of Canada’s most popular housing markets, which saw trajectories pointing upward for top-tier real estate.