The Greater Toronto Area’s luxury housing market surged in appreciation last year, and while only modest gains are expected through 2019, auspicious conditions are nevertheless anticipated.
A Royal LePage report found GTA luxury condos appreciated 10.2% through the 12 months preceding January 31, to hit an average of $2,268,571. According to Elli Davis, sales representative with Royal LePage Real Estate Services Ltd., boomers are the catalyst.
“There were fewer listings available in the larger suites, so there was higher demand for them and, therefore, that often resulted in multiple offers last year, which drove up the sale prices,” David told MortgageBrokerNews.ca. “This spans the entire luxury market but it was pronounced in units over 2,000 square feet, which are the type of suites boomers go for because they’ve just sold their family homes but want something equally beautiful, just with a different lifestyle.”
In particular, units with three bedrooms—of which there was a paucity last year—drew considerable attention from buyers and that drove prices skyward.
The median price of a luxury house, on the other hand, increased modestly. The price rose to $3,575,702, a 3.1% increase between January 31, 2019 and the previous 12 months. The marginal gain in price is likely a consequence of the 40% drop in luxury house sales during that 12-month span.
Montreal’s luxury detached housing market fared very well, appreciating 5.4% year-over-year to reach $1,680,942. As in Toronto, where luxury house listings fell by nearly half, Montreal buyers are being frustrated by low inventory.
Additionally, Montreal’s luxury condominium market rose 8.4% to hit $1,295,401.
“Provincial measures to dampen foreign buyer activity in Toronto and Vancouver have increased demand for luxury property in Montreal, but this demand is mostly seen within the downtown condo market,” Marie-Yvonne Paint, a Royal LePage Heritage real estate broker, said in the report. “We are seeing an increase in demand for presale condo units where investors will buy several units to benefit from a discount.”
About 30% of units in Montreal’s condo buildings are luxury designated, and they are proving popular with buyers.
“This is perfectly suitable for those wanting to enjoy luxury living with typical condo amenities and lower maintenance fees,” continued Paint. “Condominiums that are predominantly luxury units often have significantly higher fees because there are fewer units and more luxury amenities.”
By the end of January 2020, Royal LePage forecasts Greater Montreal’s luxury houses to appreciate 6.6%, which would bring prices up to $1,792,037, and luxury condos to surge 7.7% for an average price tag of $1,395,056.