Engel & Völkers released its 2022 Mid-Year Luxury Real Estate Market Report today, featuring data from the year's first half for homes priced $1 million and higher. It analyzes Canada's most in-demand real estate markets — Halifax, Montréal, Ottawa, Toronto, and Vancouver. The report finds markets are normalizing across the country. With residential construction costs growing by 25 percent year-over-year in 2022's first quarter, the resale market is poised to be favorable for homebuyers and investors.
PHOTO: Engel & Völkers
At the start of 2022's second quarter, the Bank of Canada increased interest rates. This triggered market normalization, helping to bring more balanced conditions to Canada's real estate markets. As a result, sales volume decreases, and replenished inventory is causing price growth to plateau or decline. Price declines are most common in areas that saw exponential growth during COVID. However, many home values continue to increase year-over-year, though the growth rate has slowed.
While the real estate market is adjusting, many prospective homebuyers opt to 'wait and see' before purchasing a home. As a result, the rental market has returned to pre-pandemic prices in the central locations of Canada's major cities.
Montréal's luxury condo market continues to grow, with the average sold price in the $1 - 3.99 million range rising 14 percent from last year. Though land supply in Montréal is finite, significant development is underway in the city, offering an influx of new inventory in the next two years.
Engel & Völkers forecasts that the market will continue to normalize throughout the year's second half. It advises that now is an optimal time for prospective buyers to shop for real estate in a less competitive environment where there is room for negotiation. It also expects that once market prices stabilize, waiting buyers will return, and market competition will accelerate again. This could happen as soon as this fall.
"Canada's real estate market is returning to a steadier pace after an unprecedented growth period. While some buyers continue to monitor the market and the Bank of Canada's interest rates, this provides an opportunity for eager buyers to negotiate deal terms and prices on properties, unlike in recent years," says Anthony Hitt, president, and CEO, of Engel & Völkers Americas.
He proceeded to share; "We find that interest rate increases are not as disruptive to the ultra-premium markets, as these buyers tend to purchase homes with the majority of the equity paid upfront. We expect luxury markets to remain stable in Canada, as real estate remains an attractive investment."
SOURCE: Engel & Völkers