Vancouver luxury market experiences slowdown due to foreign buyer tax; GTA keeps up record pace
Toronto and Kelowna, November 3, 2016// Sales of homes priced over $1 million were up year-over-year in Toronto, Vancouver, Calgary, Victoria and Oakville in the first nine months of 2016. In the Greater Toronto Area and Vancouver, Canada’s largest high-end housing markets, sales of $3 million-plus homes saw significant increases, of 86 per cent in the GTA and 41 per cent in Vancouver.
While Vancouver sales of $1 million properties were up by three per cent overall, single-family home sales in that range declined by seven per cent year-over-year. One factor contributing to this decrease is the foreign buyer tax implemented by the provincial government in August, which has resulted in slowing demand for single-family detached homes from off-shore buyers.
“Vancouver’s high-end market has experienced a slowdown in the past several months after a period of record-breaking sales,” said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Part of this may be due to the tax on foreign buyers that was introduced in August, though there may be other factors at play as well, such as higher inventory lessening buyers’ sense of urgency.”
The Greater Toronto Area’s market has experienced continued strong demand for luxury properties, with sales of homes over $3 million rising by 86 per cent year-over-year. This is largely attributable to overall price appreciation in the market, driven by low inventory and high demand for single-family homes, which has resulted in more homes meeting the higher dollar threshold. Additionally, significant price appreciation throughout the housing market has allowed move-up buyers to build up enough equity in first or second homes to purchase a high-end home.
“Demand for luxury homes remains very strong in the Greater Toronto Area, driven mainly by local move-up buyers, though foreign buyers continue to play a significant role as well,” said Pamela Alexander, CEO and Regional Owner, North America, RE/MAX INTEGRA. “While there has been speculation that Toronto would see an increase in off-shore buyers as a result of the recently implemented foreign-buyer tax in British Columbia, we have not seen this effect to date.”
High demand in the GTA and Vancouver has resulted in a spillover effect in neighbouring markets, as buyers look further out for more selection and value. Victoria saw sales of properties over $1 million increase 82 per cent over the same period in 2015, driven primarily by downsizers relocating from Vancouver for retirement. In Oakville, an affluent suburb to the west of the GTA, sales of $1 million-plus homes increased by 111 per cent year-over-year, driven by price appreciation throughout the market as well as increased interest from foreign buyers.
Calgary’s luxury market has stabilized over the first nine months of 2016, and after a period of declines, sales of $1 million-plus homes were up 13 per cent year-over-year. There have been fewer luxury homes coming on the market, as sellers hold back until values rebound. Meanwhile, buyers have increasingly looked to take advantage of lower prices for luxury properties. If these trends continue, Calgary’s luxury market is expected to remain stable with properties holding their value for the remainder of the year and into 2017.
Sales of luxury condominiums in Canada’s two largest luxury markets have experienced significant growth in 2016, driven by increasing demand from downsizers, as well as limited inventory of single-family homes. Condos sold for over $2 million rose by 42 per cent in Toronto, while Vancouver saw sales grow by 60 per cent compared to the same period in 2015.
Luxury market trends seen in Canada’s major markets during the first nine months of the year are expected to continue through the end of 2016 based on interviews with RE/MAX brokers and associates. For more information, please visit the 2016 RE/MAX Spotlight on Luxury.