Vancouver’s luxury real estate market is a curious study in contrasts, with demand and price growth performance in the single-detached and condo segments varying significantly.
According to Knight Frank LLP’s latest Prime Global Cities Index, Vancouver experienced the greatest decline worldwide in the luxury market during the third quarter of 2018. Average sale prices fell by 11% year-over-year, in large part due to considerable slowdown in crucial areas like West Vancouver.
Coming just behind were Stockholm, Istanbul, and Taipei, all with 6.3% decreases compared to Q3 2017.
The Vancouver market’s sluggishness was mainly triggered by unrelenting pressure from the foreign buyers’ tax, which pulled down luxury single-detached sales volume by 31% year-over-year, according to the 2018 RE/MAX Spotlight on Luxury Report.
“The foreign buyers’ tax has impacted overseas activity, opening more opportunities for local buyers to enter the luxury market,” RE/MAX of Western Canada executive vice president Elton Ash said.
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“As a result, local buyers are driving demand for luxury condos going into 2019, which is welcome news for developers in major city centres looking to build more properties,” Ash explained.
Indeed, the city’s luxury condos (especially units in the $1-2 million price range) have proven to be strong attractions for two major buyer demographics.
“Many Canadian Baby Boomers saw the strength of the real estate market over the past two years as an opportunity to cash-in, downsize and upgrade into the luxury market for retirement,” RE/MAX INTEGRA Ontario-Atlantic Canada Region executive vice president Christopher Alexander said.
“We’re also seeing an emerging trend of Millennials entering the lower end of the luxury condo market, as they tap into their inheritance to invest in this popular property segment.”
Vancouver’s luxury condo segment experienced a 6% year-over-year increase, while the sale price of the most expensive units went up by 34%, from $8.7 million in 2017 to this year’s $11.7 million.