Canada’s luxury real estate market just had an historic year.

A report from Sotheby’s International Realty Canada says chronic inventory shortage in the country’s conventional and luxury housing markets left a lot of buyers out in the cold, but that didn’t stop purchasers in the Greater Toronto Area from acquiring $4 million-plus homes, sales of which surged by 224%. In Vancouver, sales of homes that were at least $10 million increased by a 240%, the largest percentage gain in that category in major cities. Montreal, too, experienced a record-breaking year in 2021, with sales in the $4 million-plus category increasing by 171% year-over-year.

Toronto Leads Major Canadian Luxury Real Estate Markets

Demand for luxury housing in the GTA resulted in record highs last year. Although market confidence has been robust throughout the COVID-19 pandemic, it reached a new gear in 2021 due to a vigorous economy and the amount of excess cash in households bolstering Canadians’ savings. Rock bottom interest rates and inflationary pressures also ensured demand for local real estate remained strong. Sotheby’s noted that local ultra-high-net-worth consumers and real estate developers “redefined the concept of luxury living”: homebuyers sought luxury condominiums and single-family homes with amenities, design trends, and services typically seen in prestigious real estate markets globally.

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In addition to $4 million-plus homes increasing to 805 sales in the GTA, the $10 million-plus category saw transactions rise by 238% year-over-year to 31 total sales. Sotheby’s says that buyers value their privacy and are increasingly migrating from the Multiple Listings Service (MLS) to exclusive platforms. The real gains were in the $1 million-plus market segment in which sales rose by 194% to 52,776. In the City of Toronto, sales in the $4 million-plus category increased by 188% year-over-year to 465 properties, 19 of which sold for more than $10 million, which is a 173% increase over 2020. In the $1 million-plus category, transactions grew by 158% to 16,041 total sales. Although 2021 was a benchmark year for the GTA’s luxury market, Sotheby’s says it was apparent during the latter half of the year that supply and demand were imbalanced, with the latter vastly outpacing the former.

Demand was high for mega-units, or condos that are as expensive as they sound because they are equipped with everything from international-calibre, ultra-luxury amenities, capacious outdoor spaces, on-call concierge and sommeliers services, as well as private entrances and elevators.

Montreal Luxury Real Estate Market Smashes Records

Records were set in Canada’s second-largest city, as well. Sales gains in Montreal reflected consumer optimism, Sotheby’s says, stemming from job recovery and a vital economy. Low interest rates and pandemic-related lockdown strictures, which were among Canada’s most strident, encouraged Montrealers to rethink their living spaces. However, the city’s luxury market was also beset by low inventory and through-the-roof demand exacerbated price acceleration in popular neighbourhoods.

READ: Sale of Montreal Mansion Shatters Quebec Real Estate Record

Sales in Montreal’s $4 million-plus category across all housing types increased by 171% year-over-year to 41 units sold in 2021, of which two properties sold for over $10 million and equalling the 2020 total in the ultra-high category. Sales in the more modest luxury category of $1 million-plus increased by 137% year-over-year to 1,810. However, sales in the second half of the year reflected the paucity of available inventory: sales over $4 million increased by 50% to 27 properties sold, and only one of them was for more than $10 million. Interestingly, sales for homes over $1 million declined by 3% compared to H2-2020 with 826 transactions. Single-family home sales comprised 44% (794 units) of the $1 million-plus category sales for the entire year, a 130% year-over-year increase.

Montreal’s inventory of single-family homes was so low that it limited completed transactions during the latter half of the year, according to the Sotheby’s report. However, the city’s luxury condo market saw sales over $1 million surge by 165% year-over-year to 438 units sold in 2021. Sales in the $4 million-plus category rose by 117% to seven units sold, while there was only one condo sale for more than $10 million in the city last year. Luxury condos comprised 24% of all luxury transactions in the $1 million-plus category, Sotheby’s noted, adding that local end-user, investor and out-of-province demand for tony condominiums was extremely robust throughout the year.

Vancouver’s Luxury Real Estate Prices Surged Amid Scarce Supply

The City of Vancouver’s real estate market was red-hot all through 2021, Sotheby’s reports, for reasons that are much the same as they were in Toronto and Montreal. Desire for enhanced living spaces drove the luxury market along with second-home and purchases property investment.

Property sales in the $4 million-plus category soared by 171% year-over-year in 2021 to 410 units sold. As in Toronto, growing appetite for privacy resulted in 24 properties sold for over $10 million recorded on the MLS, 218% more than the 11 transactions a year earlier. Sales in the $1 million-plus category surged by 145% over 2020 to 5,794.

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Mirroring Toronto and Montreal was the inventory scarcity in Vancouver, which glared in light of strong demand and resulted in double-digit price gains and bidding wars, Sotheby’s says. Consequently, potential sellers opted to forego listings their homes for fear that they might not be able to secure a new one. Market activity began slowing in H2-2021 as a result of supply shortages, with only 163 sales over $4 million, which was a 10% year-over-year increase. Ultra luxury sales over $10 million grew by 14% to eight compared to the prior-year period. There was only a 1% year-over-year increase of sales in the $1 million-plus category through the third and fourth quarters of 2021, with 2,470. Single-family home sales in the $4 million-plus category were strong throughout 2021, increasing by 172% year-over-year to 36, while they rose by 129% to 2,909 in the $1 million-plus category. Single-family home transactions of more than $10 million also surge by 240% to 24 in 2021.

Luxury condos in Vancouver “propelled the market to new records in 2021,” Sotheby’s report said, despite the growing fissure between prices and demand widening. Luxury condos over $4 million increased by 137% year-over-year to 37 units, while there were zero transactions over $10 million recorded on the MLS. However, there were 1,600 condos sold for over $1 million in 2021, a year-over-year increase of 171%.