The Greater Toronto Area (GTA) luxury real estate market continues to remain red hot.

But it's not only the GTA market that is seeing record activity in the luxury real estate sector -- a number of Canadian metropolitan markets are also undergoing an "unprecedented phase of evolution and expansion," according to Sotheby’s International Realty Canada 2021 Spring Outlook Real Estate Report.

The report comes just one year after the inception of the pandemic, which has resulted in dramatic changes to the housing preferences of affluent Canadians, as household savings continue to increase and interest rates remain at historically low levels.

With sales activity and price gains already accelerating across the country in major cities, Sotheby's says strong performance is projected for this spring.

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“Canada’s luxury real estate market is undergoing a dramatic transformation as a result of the pandemic. Many of these changes will not only inspire spring sales activity but have a long-lasting impact on real estate demand in our country,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada.

Kottick noted that the company has noticed foundational changes in the home and lifestyle preferences across Canadian generations. This includes a new level of willingness to invest in home buying and renovations that will help improve the quality of housing stock, and therefore prices.

"We are forecasting multiple waves of consumers in the coming months, both local and international, who have a desire for Canadian real estate ownership that has never been stronger," said Kottick, adding "most importantly, these potential buyers have unprecedented access to cash and low-cost borrowing that will enable them to engage in the market in months to come.”

According to Kottick, Canada’s metropolitan luxury real estate market is primed for a healthy spring performance, and in most markets, the ceiling for sales activity will be capped by lack of inventory rather than consumer demand.

On a local level, the region is once again poised for significant gains across the conventional and luxury markets, as consumer and industry confidence continue following last year’s uncertainty, and as housing preferences shift to accommodate work and lifestyle needs.

While overall GTA sales increased 52.5% in February 2021, according to the Toronto Real Estate Board, Sotheby's says luxury sales activity has also resurged to above pre-pandemic levels and is surpassing the performance of the conventional market in several premier neighbourhoods. 

Based on the GTA's market performance in the first months of 2021, Sotheby's says it predicts a heated spring market with accelerating sales and price gains.

The luxury brokerage believes intense demand for high-end housing, coupled with an extreme supply shortfall continues to drive widespread bidding wars across the GTA luxury market, further propelling price increases and rapid sales.

As a result, luxury residential real estate sales of over $4 million (condominiums, attached, and single-family homes) increased 157% year-over-year to 90 properties sold in the first two months of 2021.

Of these, five ultra-luxury properties sold for over $10 million, compared to just one property sold in the same price range during the same period of 2020. Sales between $2–4 million and $1–2 million each experienced 126% gains to 901 and 6,038 properties sold, respectively. Overall sales over $1 million were up 126% in the first two months of the year to 7,029 properties sold.

As was the case in Vancouver, Calgary, and Montreal, the GTA’s luxury single-family home market saw the greatest demand from affluent consumers following the pandemic’s inception. In the first two months of 2021, sales over $4 million rose 203% from the same period in 2020 in the GTA.

As for the GTA's luxury condominium market, Sotheby's says it remained resilient in the initial months of 2021, and early March data reveals a segment that is poised to gain ground in the months to come.

"While consumer demand for luxury single-family homes eclipsed that for condominiums in the latter months of 2020, high-end condominium sales activity is experiencing a notable spring renewal," according to Sotheby’s, with bidding wars and brisk sales the new norm.

The report notes that demand for this segment is returning as consumer confidence in luxury condominium living rises with the prospect of broad vaccine availability in Canada, not to mention the lack of inventory in the single-family and attached home markets is also helping to channel homebuyers into higher density housing.

As Canada’s largest real estate market, and as the country’s leading destination for immigration, migration and international trade, Sotheby's says the GTA is expected to see an additional influx in luxury real estate demand from Canadian expatriates, new immigrants, and permanent residents, as well as international investors as soon as domestic travel restrictions and international borders reopen.

This, along with local consumer confidence and the strength of the region’s underlying fundamentals, positions the GTA luxury market for robust performance in the months ahead.