As Canada continues to rebuild its economy amid the pandemic's ongoing fourth wave, renewed consumer confidence and economic optimism are fuelling the country's luxury real estate market in the process.
Following record-shattering sales in most major markets through the first half of 2021, pandemic-related influences, including a return to city life and job gains, have since bolstered price gains across the country, according to Sotheby's International Realty Canada'sTop-Tier Real Estate Fall Forecast report.
However, a severe shortage of available supply continues to undermine potential sales across multiple housing segments -- including the conventional and luxury markets for condominiums, attached, and single-family homes -- limiting housing mobility and accelerating housing prices in the process.
As demand goes unfilled, coupled with an expected influx of prospective buyers, Sotheby's believes prices will rise further as activity remains steady during the busy fall market.
Sotheby's says frenetic sellers' markets drove luxury residential sales over $4M up 276% year-over-year in the Greater Toronto Area, 152% in Vancouver, and 133% in Montreal over the first half of the year. During this period, heated bidding wars that increased housing prices to historic highs were the norm.
Sales managed to taper off briefly during the summer, as buyer frustration and fatigue set in. However, this lull in activity was brief and only masked underlying consumer demand, according to the report. Just a few weeks into fall and activity has already resumed.
The luxury real estate brand expects Calgary to see a balanced market this season, while "extreme" demand-supply imbalances in Toronto, Vancouver, and Montreal are deeply apparent.
"This is now revealing itself in increased activity in the comparatively accessible top-tier condominium market, buyer fatigue and hesitancy, market conditions that almost universally skew in favour of sellers, and continued price gains in the months ahead," said Sotheby's.
According to the report, the Greater Toronto Area (GTA) luxury real estate market eclipsed all other major markets during the first six months of 2021. Residential sales over $4M, including condominiums, attached and single-family homes, soared an aforementioned 276%, while sales over $1-million increased 217% year-over-year in a sellers' market characterized by "exuberant consumer and investor confidence, heated bidding wars, sharply rising prices, and an under-supply of top-tier inventory."
An unexpectedly busy summer resulted in total residential real estate sales of over $4M rising 12% year-over-year in just July and August, while six ultra-luxury properties (over $10M) were sold in 2021 compared to four properties in this price range over the same period last year.
As in other major metropolitan markets, the GTA luxury condo market strengthened as confidence in urban living increased. Subsequently, sales of luxury condominiums over $4M were up 40% year-over-year after seven units sold in the GTA in July and August, with one ultra-luxury unit selling for over $10M.
This activity outpaced the percentage gains experienced in luxury single-family home sales over $4M, which saw a 15% year-over-year increase from the summer months of 2020.
However, Sotheby's says residential sales of over $4M between the first two weeks of September reflect underlying consumer demand for 'premier real estate' leading into fall, as sales increased 33% year-over-year.
With demand-supply disproportions apparent across the GTA -- for conventional and luxury housing -- Sotheby's says this imbalance will be the deciding factor in the region's overall performance in the coming months. It's expected that luxury activity in the GTA may normalize from the "unprecedented, history-making" conditions of the first half of the year, but only slightly, as local and international demand remains strong.
In the months to come, Sotheby's says it expects that continued supply shortfalls throughout the GTA will drive constant price acceleration further.