Luxury home prices are on the rise in Montreal, Toronto and Ottawa, according to Royal LePage’s annual market forecast.
Royal LePage defines luxury homes as those that sell for at least $1.32 million. Supply is limited in Toronto’s high-demand areas, with confidence lacking among potential move-up buyers worried over not finding a suitable listing if they sell their current property.
“Luxury condominiums in Toronto saw significant price appreciation as the region’s international reputation continues to grow,” said Kevin Somers, chief operating officer, Royal LePage Real Estate Services Ltd. “Demand has remained healthy for luxury houses in Toronto and Ottawa, however, Montreal’s detached luxury home market continues to show significant upward price momentum.”
In Western Canada, both the greater regions of Vancouver and Calgary showed year-over-year declines in luxury home prices.
“We are seeing encouraging signs that Vancouver’s luxury market is stabilizing,” said Somers. “While no near-term price increases are expected in Vancouver and Calgary’s luxury markets, buyers and sellers are increasingly more confident that the market is stable.”
Greater Toronto Area
The average price of a luxury house in the Greater Toronto Area was up 1.2 per cent to $3,629,916, while the average price of a luxury condo rose 7.0 per cent to $2,402,650.
“Luxury buyers face the same low inventory scenario that challenges the overall residential market,” said Steven Green, sales representative, Royal LePage Partners Realty. “Some of the city’s most desirable pockets have a very low inventory of listings, which is unfortunate for sellers who want to move up in the same neighbourhood.”
Green added that high demand for condos reflects the range of buyers the housing type attracts. Boomers and young executives looking for low maintenance, luxury property are competing against investors and foreign buyers also seeking a low maintenance property to use as a secondary residence. However, all luxury listings, whether detached or condominium, mid- to downtown including central, east and west, are getting a lot of attention.
Over the next year, luxury houses are expected to increase by 2.5 per cent to $3,721,000 while luxury condos are expected to spike 6.0 per cent to $2,547,000.
The region saw the highest rate of year-over-year price appreciation for both luxury houses and luxury condominiums in the twelve-month period ending January 31, 2020. During this period, the median price of a luxury house in the Greater Montreal Area rose 8.5 per cent to $1,853,513 year-over-year. The median price of a luxury apartment-style condominium rose 8.3 per cent to $1,409,262 over the same period.
Most in demand are neighbourhoods are Westmount and Outremont, but interest in luxury properties in Le Plateau and Griffintown is surging. West Island is another desirable area where prices are going up. The average luxury condo price is forecast to rise 5.0 per cent to $1,480,000.
“Luxury house sales are happening quickly because buyers know there is significant competition for a limited supply of listings,” said Marie-Yvonne Paint, Royal LePage Heritage. “However, while demand continues to grow for luxury condominiums, buyers still have excellent selection and there is less pressure to move quickly when a listing becomes available.”
Luxury condo prices rose 2.2 per cent to $1,010,870 in the last year. The IT sector and senior public sector employment are said to be driving demand, but also high-earning families
While the market is balanced for luxury properties under $1.8 million, buyers looking for properties listed above $1.8 million will find more selection.
“Luxury new build condo projects are selling between $800 and $1,000 per square foot, which is more than what is being asked in the luxury resale market, said Charles Sezlik, sales representative, Royal LePage Team Realty. “The price gap is putting upward pressure on resale luxury condo prices. Rising land acquisition and construction costs are significant contributors to increasing prices in the luxury home market.”