VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 09/10/13 -- Following analysis of Canada's largest metropolitan real estate markets, Sotheby's International Realty Canada is forecasting that the high-end real estate market will gain momentum in fall 2013, and expects several regions to transition into sellers' markets before the end of the year.
As reflected in the most recent Top-Tier Real Estate Report, the high-end real estate market in the first half of 2013 gained traction over the last half of 2012, with sales up 65% in Vancouver, 67% in Calgary, 61% in Toronto and 29% in Montreal in the single family home category. Luxury attached home sales in all four markets increased as the average numbers of days on market declined, and sales of condos over $1 million were up in Vancouver, Calgary and Toronto. In addition to strong real estate sales activity over the summer, key indicators for a strong fall market include strong national and regional economic fundamentals, as well as expected growth in the volume and diversity of international buyer demand for luxury real estate from regions including China, Russia, the Middle East, India and the United States.
According to Ross McCredie, President and CEO of Sotheby's International Realty Canada, "In examining the performance of the high-end market, we feel confident that Canada's largest urban centres remain in exceptional positions heading into fall, with healthy market fundamentals from coast to coast."
-- The Bank of Canada's September 2013 announcement confirming interest rate stability will have a positive impact on the high end market. As shown in Sotheby's International Realty Canada's Top Tier Trends Report (April 2013), approximately 50% of luxury buyers use mortgages to finance their homes. A significant portion of domestic and international investors also use mortgages as a strategic component of their investment strategy. Further, many international investors also see the conservative fiscal policies of the Canadian government as an attractive factor to purchasing real estate in Canada.-- The influence of international buyers in the high end will continue to increase in Toronto, Montreal, Vancouver and Calgary. Based on regional data from the Top Tier Trends Report (April 2013) the strongest foreign buying influences include China, Russia, the Middle East, India and the United States.-- Entry pricing for luxury single-family homes in Canada's major urban centres will remain stable at $2 million dollars on average, with regional variations.-- The luxury condo market will remain stable across most Canadian markets. Toronto's high-end condo market is expected to strengthen.-- In spite of an upward trend in average sales price in several markets and several product categories, these prices will continue to find consumer support.
Throughout 2013, Calgary has led Canada's upper-end real estate market in nearly every category. Calgary ended the summer with a strong finish and experts predict sales momentum to continue into fall, as resale and rental inventory remains tight. Strong employment and migration numbers reflecting the city's continued economic health will drive demand- it is estimated that for every 300 square feet of new office space created, an additional person is added to downtown Calgary. The high number of executive level jobs created will continue to fuel demand for top-tier real estate specifically, as newcomers take advantage of the city's relatively affordable real estate market to "buy up". In spite of the floods experienced by the city this summer, there is not enough data to date to show any long-term impact on the housing market, particularly in the high-end.
The forecast for Vancouver's high-end real estate market is positive for fall 2013. The precautionary mortgage lending restrictions introduced by the Bank of Canada in 2012 will no longer impact Vancouver's upper end real estate market. Sotheby's International Realty Canada experts anticipate the positive sales momentum from this summer to continue into the fall. With 955 of the 1,239 homes sold over $1 million in the first half of the year being single-family homes, single-family home sales are expected to lead the high-end market. Vancouver will continue to be supported by the influence of international buyers: according to Sotheby's International Realty Canada's Top Tier Trends study (April 2013) approximately 40% of buyers of luxury single family homes were from outside of Canada and this trend is anticipated into the fall. As in previous years, China will remain the top market influencer, along with Iran and the United States.
Despite a slower start to the year, the Greater Toronto Area (GTA) market has experienced a notable rebound that Sotheby's International Realty Canada experts believe will continue into the fall of 2013. The tightening supply of top-tier real estate, a tight rental market, as well as stable Bank of Canada interest rates, will be three of the main drivers. In spite of price increases, the average selling price of homes, including condos, has found consumer support at current levels. The latest Toronto Real Estate Board Affordability Index also reflects the fact that the average GTA household can comfortably afford monthly mortgage payments and that these payments are within the 39% maximum gross debt-service ratio (GDS) established by the federal government. In spite of negative industry predictions regarding the high-end condo market earlier in 2013, this market segment show signs of strength leading into the fall, with the number of condo resales increasing in the conventional and high end market compared to earlier this year.
A balance is anticipated for the high-end real estate market in fall 2013. Although Montreal's political climate has anecdotally had a dampening effect on the high-end real estate market, the city remains one of the most affordable and desirable cities in Canada. Furthermore, Montreal has led and will continue to lead the country in luxury real estate sales to international buyers. 50% to 60% of high-end homes now sell to foreign buyers, and experts believe that numbers will increase with strengthening demand from Asia and the Middle East. Single-family home sales over $1 million experienced notable and steady growth across the majority of price points in the first half of 2013, foreshadowing stability in this category. While Montreal's high-end condo market has experienced a softening in 2013, the positive sales momentum seen in condos in the $1-2 million range in the first half of the year is expected to continue. The international influence on the market for investment-friendly condos is also notable: foreign purchasers have been buying multiple units of 600 square foot condos in several new downtown developments, a recent and promising trend for the market.
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Combining the world's most prestigious real estate brand with local market knowledge and specialized marketing expertise, Sotheby's International Realty Canada is the leading real estate sales and marketing company for the country's most exceptional properties. With offices in over 25 residential and resort markets nationwide, our professional associates provide the highest caliber of real estate service, unrivaled local and international marketing solutions and a global affiliate sales network of approximately 600 offices in more than 45 countries to manage the real estate portfolios of discerning clients from around the world.
(i) The information contained in this report references market data from MLS boards across Canada. Sotheby's International Realty Canada cautions that MLS market data can be useful in establishing trends over time, but does not indicate actual prices in widely divergent neighborhoods or account for price differentials within local markets. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information and analysis presented in this report, no responsibility or liability whatsoever can be accepted by Sotheby's International Realty Canada or Sotheby's International Realty .