Luxury real estate market proves resilient

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Luxury market prevails thanks to pent-up demand, unprecedented population growth and declining interest rates

Political and economy uncertainty, the rising cost of living and rising inventory contributed to a “tumultuous landscape” for luxury real estate last year but the market prevailed thanks to pent-up demand, unprecedented population growth and declining interest rates.

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“Even though affluent real estate buyers and sellers are typically insulated from the effects of mortgage rate changes, the swift series of consecutive interest rate cuts improved consumer confidence and enabled upward mobility from conventional markets into the entry-level top-tier segment,” according to Sotheby’s International Realty Canada 2024 Top-Tier Real Estate: 2024 State of Luxury Annual Report.

“Canada’s conventional and luxury real estate market demonstrated remarkable resilience in 2024 and closed the final quarter of the year with a pick-up in sales activity that foreshadows further improvement in the months ahead,” says Sotheby’s International Realty Canada president and CEO Don Kottick.

“Several of the country’s largest markets emerged from two years of uncertainty to deliver sustained and consistent gains in 2024, with demand rechanneled into the single-family home segment,” he says.

Report highlights from across the country:

• Luxury sales over $4 million increased 21 per cent year-over-year in the Greater Toronto Area (GTA), setting the tone for broader trends nationwide.
• The pace of Calgary’s luxury market expansion surpassed that of all other major Canadian cities in 2024, as economic confidence and record-setting interprovincial migration ignited housing demand. Residential sales over $1 million and $4 million saw annual gains of 42 per cent and 100 per cent respectively.
• Montreal’s luxury market posted healthy annual gains of 38 per cent in residential sales over $1 million and 16 per cent for sales over $4 million.
• Consumer sentiment and sales activity in Vancouver’s luxury market lagged in 2024, as buyers’ market conditions took hold and $4 million-plus residential sales closed the year 11 per cent below 2023 levels.

Though single-family homes are driving the market across the country, Kottick says the luxury condominium market has emerged as one of the country’s top long-term real estate investment opportunities, especially in Toronto and Vancouver, where supply outweighs demand and prices have dropped from previous highs.

Engel & Völkers’ 2024 Year-End Canadian Luxury Real Estate Market Report also highlights stability and demand for luxury and ultra-luxury real estate in 2024’s second half.

The report “underscores the remarkable resilience of Canada’s premium housing markets, particularly in cities like Toronto, where ultra-luxury home sales tripled from the first half to the second half of 2024,” says Andrew Dinsmore, chief financial officer, Engel & Völkers Americas.

“Toronto’s tripling of $10 million sales reflects a robust demand for high-value properties, while Vancouver’s stability in the $2 million to $3.99 million range highlights the enduring appeal of the city’s detached market. As we move into 2025, these trends, combined with government policies and shifts in buyer behaviour, will continue to shape the trajectory of the luxury real estate landscape.”

The Engel & Völkers report also highlights that home sellers in Canada’s premium metro markets waiting for the so-called “holy grail” spring market may face increased competition. “The long-awaited market recalibration appears to be nearing its final phase, with several key national trends shaping the landscape,” it says.

First-time homebuyers are driving a surge in activity, fueled by new government incentives and an increased insured mortgage cap from $1 million to $1.5 million. Canada’s condo market recovery remains tied to competition in the detached housing sector, while the country faces a looming supply shortage due to a slowdown in new developments, according to the report.

Re/Max Canada echoes those reports, finding the GTA’s luxury housing market shifted into “high gear” in the final quarter of 2024, with sales over $3 million climbing more than 40 per cent ahead of year-ago levels for the same period. Just over 360

freehold and condominium properties exchanged hands, up from the 259 sales reported in the same period in 2023, Re/Max reports.

“The impact of the first and second 50-basis-point rate cuts by the Bank of Canada radiated throughout the GTA in the fourth quarter, jumpstarting demand for high-end properties both within the city and suburbs,” says Re/Max Canada president Christopher Alexander.

“We’ve been expecting a surge in top-tier sales activity as the economic climate and corresponding pause in buying intentions prompted a build-up in pent-up demand. The fourth quarter did not disappoint.

Toronto, Ottawa markets

According to the Engel & Völkers’ 2024 Year-End Canadian Luxury Real Estate Market Report:

Luxury real estate in Toronto defied rate and market pressures as $10 million sales tripled in 2024’s second half. Residential properties worth more than $1 million will see a three per cent price increase in the first half of 2025, the luxury real estate brand predicts.

In Ottawa, properties priced between $1 million and $1.99 million accounted for nine per cent of all real estate transactions in the second half of 2024. Residential properties worth more than $1 million will see a five per cent price increase in the first half of 2025, Engel & Völkers predicts.