While the country’s luxury real estate markets demonstrate impressive resilience, what impact, if any, the federal government’s recent mortgage reforms will have on the luxury sales remains up for debate.
“In Canada, luxury home sales are defying broader market trends, particularly in major cities,” says Anthony Hitt, president and CEO of Engel & Völkers Americas. “In Toronto, we saw a remarkable 4.73 per cent-increase in sales prices for homes priced over $8 million” in the first half of the year.
Ottawa, meanwhile, had an eight-per-cent rise in sales for homes priced between $1 million and $1.99 million. The luxury price point of $2 million and above in the nation’s capital has seen more new listings than in previous years, making this period “exceptional” for the move-up market, Hitt notes.
“Previously dominated by government industry professionals, this price segment is now being driven by a new wave of wealthy entrepreneurs who gravitate to neighbourhoods like Manotick, Westboro-McKellar Park and The Glebe,” he says.
FALL MARKET
According to Don Kottick, president and CEO, Sotheby’s International Realty Canada, sales activity and consumer confidence in the country’s luxury markets have remained “largely stable” in 2024, with the most significant gains experienced in smaller cities.
“Toronto, the country’s largest luxury market, has seen an active but relatively steady market to start the fall, while Vancouver has experienced muted luxury activity due in part to some uncertainty in light of the province’s upcoming election,” he says.
“In contrast, cities like Calgary, Kelowna and Halifax are experiencing an influx of luxury buyers. This shift highlights evolving migration patterns and consumer preferences, as Canadian buyers seek luxury properties that offer greater value and space in less saturated, emerging markets.”
Calgary has seen “extreme growth” in the luxury end of the real estate market recently, with year-to-date sales over $1 million up roughly 40 per cent from the same period last year and sales of ultra-luxury homes over $4 million up 50 per cent, reports Chynna Winter of Engel & Völkers Calgary.
“Calgary continues to see a surge in population, with the majority of people moving from Ontario and B.C.,” Winter says. “Those buyers are thrilled with the level of home they can purchase in Calgary, where prices are only 60 per cent of the cost of the same home in Toronto and approximately 40 per cent of the cost of a similar home in Vancouver.”
In Montreal, local purchasers, often paying cash, are acquiring high-value properties at premium prices “without hesitation,” fulfilling all their criteria, says Patrice Groleau of Engel & Völkers Montréal. “If a property is not turn-key or misses key criteria, this should be reflected in a price adjustment and sales timelines may be slightly longer,” he adds.
Across the country, demand for single-family homes continues to lead the revitalization of luxury real estate sales, reflecting a “clear shift” in high-end consumer preferences, with buyers prioritizing privacy, long-term value and adaptable, multi-generational living spaces, Kottick reports.
INTEREST RATES, MORTGAGE REFORMS
Luxury home buyers tend to be more “insulated” from interest rate fluctuations than conventional buyers and are therefore “far less dependent” on mortgages. Still, interest rate changes influence luxury consumer psychology.
Case in point: following the Bank of Canada’s third consecutive rate reduction to 4.25 per cent in September, Sotheby’s observed a “significant increase” in pre-transaction activity among luxury buyers and sellers, particularly in key metropolitan markets like Toronto, Montreal and Calgary.
“As the market anticipates more property listings supply this fall, coupled with increasingly favourable buying conditions, we expect this momentum to carry through in the coming months,” Kottick says. “If further rate cuts occur before year-end, we expect this growing interest will convert into stronger sales and investment activity.”
Mortgage reforms — which include extending 30-year amortization periods for first-time buyers and purchasers of new builds alongside expanding mortgage insurance to cover homes up to $1.5 million — will primarily benefit first-time buyers and those purchasing conventional properties, Kottick maintains. “Given that luxury home buyers typically rely less on mortgages, these changes are expected to have minimal impact on the luxury market,” he says.
Hitt believes the reforms will likely have a positive impact on the luxury market, especially in major cities like Toronto and Vancouver. “This change will allow more Canadians to qualify for a mortgage with a down payment below 20 per cent,” he says. “These changes aim to make homeownership more accessible, even for buyers in the seven-figure price range.”
Thirty-year amortizations available on insured mortgages for all first-time home buyers may also impact the luxury market. “Longer amortization periods mean lower monthly payments, making high-priced properties more feasible for first-time buyers. This may increase demand in the luxury market, as more buyers can finance homes that were previously out of reach,” Hitt says. “It also intends to create more demand for new builds. Much of this demand was lost when foreign buyers were banned.”