10 May 2018

In case of condo sales, an annual drop was 28%, while it was 90% higher than in 2016.

Those factors, which made some buyers leave the market since April (a stricter mortgage stress test, interest rates hikes and new rules), have affected the top of the market as well, says Royal LePage CEO Phil Soper.

“When we have fewer entry-level buyers, it leads to fewer move-up. This means fewer entry-level luxury. As a result, we have fewer people buying luxury homes,” – noted Soper.

The report applies the notion “luxury homes” to properties that cost at least three times the average price in the overall market. TREB says the median single-family house cost $1.03 million in April and condos averaged $559,343.

With the numerous government interventions (e.g. a special tax on $3 million-plus homes in Vancouver which has led to protests), prices on luxury real estate remain resilient, says Soper.

However, in his opinion, there’s a chance that strong economy and high employment may cause another cycle of over-heating prices in Toronto and Vancouver.

“Although real estate in Vancouver and Toronto is very expensive for Canadians, in global terms it’s still affordable, especially in case of condos. In American dollars it looks like a great deal, even in Vancouver.”