The global luxury housing market is getting even pricier as of late -- and Toronto leads the way.
According to a recent report from global real estate agency Knight Frank, price growth for luxury homes around the world surged ahead of the mainstream market in the second quarter of 2021.
According to Knight Frank’s Global Price Index (GPI), average prices for luxury homes rose 8.2% year-over-year between April and June, an increase from 4.6% in the first three months of 2021. The Global Price Index looks at 46 urban areas.
Throughout the US and Canada, cities saw an average luxury market price growth of 16% in the second quarter.
Coming as no surprise to anyone in the Greater Toronto Area (GTA), Toronto leads the global index; here, luxury home prices increased 27%. According to the data, thirteen cities saw a double-digit prime price growth. These findings are consistent with the recent Engel & Völkers 2021 Mid-Year Canadian Luxury Real Estate Market Report, which revealed that Canada’s luxury market experienced unprecedented levels of growth in the first six months of 2021.
“The pandemic has made all of us question the ability of our present homes and amenities, [and whether we can] exist and thrive in our current properties. At the same time, [COVID-19] has made those who have thought about rightsizing be wary of any changes,” says Richard Silver of Sotheby’s International Realty Canada of the price growth in the luxury market.
“Lack of product and perceived options are pushing those with money to pay more, while at the same time pushing those with exceptional houses to be afraid of moving. Shortage of options always pushes pricing to new heights.”
In Toronto, the search for housing -- on the luxury market or not -- is a frustrating one.
“The search for options in the high end continues to frustrate buyers, but at the same time it is forcing developers to get more creative and we are seeing a more ‘New York Rent in the City, Own in the Country’ scenario,” says Silver.
Second on the Knight Frank’s GPI after Toronto is Shanghai, where luxury home prices increased 21% in the second quarter compared to this time last year. Guangzhou, China, and Seoul, Korea, followed, with both showing 20% annual growth in the second quarter of 2021. The price hikes in the three Asian cities came in spite of government attempts to cool the market, highlights the report.
Next on the list was Miami, where luxury real estate prices are as hot as the temperature. The see-and-be-seen city saw an annual price increase of 19% in the luxury market.
Somewhat surprisingly, London and New York didn’t experience the same level of luxury growth as other global cities. London saw just a 0.7% increase in prime prices; however, it was the first time the city saw positive growth since May 2016, according to the report. Taking the second-last spot, New York saw a drop of 3.7%. The city was the worst-performing global luxury market in the first quarter.
According to the report, however, Knight Frank predicts that both London and New York will fare better over the summer.
Meanwhile, Bangkok took the bottom spot, with a year-over-year decline of 6.4% in the second quarter, according to the data. Dubai was third on the list, with a drop of 3.6%.
As for Canada’s luxury market, the prices likely won’t cool in the near future. “Canada has a disturbing lack of housing and with new immigration goals it should keep the real estate market moving higher,” says Silver.
For those in the market for a luxury home in Toronto (or anywhere), Silver says to explore all options and base them on lifestyle.
Homes outside the city have advantages and disadvantages,” says Silver. “It’s all about you and your lifestyle….ah yes, and affordability, if that is an issue. Ultra-high net worth individuals have options, but deciding what works for you is not always easy. I’m a pros and cons list person. Explore your options and the make an educated choice.”