Vancouver’s luxury real estate segment has become emblematic of Western Canada’s high-end property woes, with the market suffering its 3rd straight year of sales decline, Sotheby’s International Realty Canada stated in its report released in January.
“Vancouver and Calgary’s top-tier real estate markets retreated further into buyers’ market territory, as excess supply overtook consumer demand. Across the country, markets continued to face the headwinds of rising interest rates and tightened mortgage guidelines,” Sotheby’s Canada explained.
The lethal combination of taxation and regulatory changes targeting foreign buyers drove much of the decrease in Vancouver, along with a series of rate hikes dragging down purchasing power.
To see just how large a role these factors played, sales of all residential property types in the $1 million-plus price bracket fell by 5% year-over-year in 2017, considered a “nominal” decrease at worst. The 2017-2018 deceleration was much larger at 26%, and the $4 million-plus segment experienced an even more pronounced 49% annual drop.
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Single-family numbers were even more concerning, with activity in the $1 million-plus segment falling by 35% from 2017 to 2018. During the same time frame, sales of homes valued at $4 million and above dropped by 55%.
Meanwhile, activity involving condos worth $1 million and above shrunk by 14% annually in 2018, although units in the $4 million-plus price bracket increased by 3% last year.
“While local demand for conventional and luxury housing is being supported by a population growth rate that exceeds the national average, a build-up of $1 million-plus real estate supply is expected to place downward pressure on top-tier Vancouver real estate prices into the preliminary months of 2019,” Sotheby’s Canada concluded.