Key Canadian Luxury Real Estate Markets Poised to Diverge in Spring 2015, According to Sotheby's International Realty Canada

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 5, 2015) - Following analysis of Canada's largest metropolitan real estate markets and examination of key macro-economic indicators, Sotheby's International Realty Canada is forecasting that the Greater Toronto Area (GTA) will lead Canada's high-end real estate market in the spring of 2015. Positive gains are also anticipated for the Vancouver market, while Montreal is expected to maintain balance. Continued uncertainty in the Calgary economy is expected to temper sales throughout the spring, with the degree of long term impact to be determined.

As indicated in Sotheby's International Realty Canada's January 2015 Top-Tier Real Estate Report, all major markets experienced year-over-year growth in sales over $1 million in 2014, yet the GTA led the country with a 38% increase in sales volume over the year. Vancouver experienced 25% growth in sales, while Montreal saw gains of 21%, and Calgary had a more modest increase of 16% year-over-year. It is anticipated that performance throughout the spring will follow a similar pattern with top-tier real estate sales across the GTA outpacing all other urban centres, while the Calgary market further contracts.

According to Ross McCredie, President and CEO of Sotheby's International Realty Canada, "Historically low lending rates will be the driving force behind top-tier real estate sales across the country into mid-2015. With both the Ontario and BC economy positioned for growth, the high-end real estate market in Toronto and Vancouver will experience the greatest gains. While uncertain economic conditions in Calgary will shake consumer confidence in the market as a whole, buyers in the high-end may look to take advantage of the opportunity created."

National Highlights

• The reduction of the key overnight interest rate to 0.75% by the Bank of Canada in January 2015 along with the recent decision to hold rates into the spring will have a positive and stabilizing impact on sales over $1 million. Historically low lending rates will ease the ability for buyers to enter and upgrade within the real estate market by offsetting price gains, and signals a measured approach to monetary policy that appeals to foreign investors seeking stable real estate markets.
  
  
• The economic impact of the decline in oil prices will vary from province to province, with differing degrees of influence on top-tier real estate sales in Canada's largest cities. Following several years of real GDP growth in Calgary, The Conference Board of Canada has forecast a 1.5% contraction in Alberta's economy in 2015, shaking consumer confidence and skewing the $1 million-plus housing market in favour of buyers this spring, with longer-term results to be seen.
  
  
• Ontario and British Columbia are projected growth leaders in the nation's economy in 2015, fuelled by the lower Canadian dollar, gains in the U.S. economy and strengthening consumer confidence. As a result, the net effect on the sales of top-tier homes in the GTA and Vancouver is expected to be positive.
  
  
• Consumer demand will continue to outpace available inventory of single-family homes over $1 million in major markets. The strongest sales are expected in the GTA followed by Vancouver. Modest growth is anticipated in Montreal while sales in Calgary are expected to temporarily slacken.
  
  
• Sales of condominiums over $1 million are expected to remain stable in both the GTA and Vancouver. Demand in Montreal is expected to remain balanced, while uncertainty in the Calgary market will result in a slowdown in high-end condo sales.
  
  

Vancouver

Following a year that saw the sales of homes over $1 million increase by 25% to 3,134 units (condominiums, attached and detached single-family) sold in 2014 over 2013, Vancouver is expected to experience gains in sales over $1 million this spring as a confident provincial economic forecast, projected surge in net migration into the Vancouver area and continued foreign investment sustains demand for housing. Within the first two months of 2015, total home sales over $1 million were nearly on par with sales over the same period in 2014, as Vancouver's conventional and top-tier market showed signs of increased activity leading into March. Detached single-family homes over $1 million, which comprise the largest segment of home sales in this price range, saw a 24% increase in 2014 sales over 2013 and gains are anticipated in the coming months. Meanwhile, demand for attached home sales over $1 million is projected to continue its trend upwards as consumers seek alternatives to single-family homes.

Calgary

After several years of sustained growth, uncertain economic conditions and lowered consumer confidence are expected to temper real estate sales in Calgary's $1 million-plus market in the spring of 2015. In 2014, Calgary's top-tier real estate market posted a 16% increase in home sales over $1 million compared to the year prior with a total of 836 units (condominiums, attached and detached single-family) sold. While low inventory in 2013 and early 2014 drove bidding wars and price increases in a market that favoured sellers, recent uncertainty will result in increased inventory and a slowing of sales, creating an opportunity for buyers, particularly those looking to purchase luxury real estate or to enter the conventional market for the first time. While any long term impact of Calgary's changing economy on top-tier real estate is still to be determined, historically low lending rates, residential vacancy rates that are expected to rise slightly but remain tight, and an unemployment rate that remains lower than that of other major Canadian cities, will help to reinforce the high-end market in the short-term.

Greater Toronto Area (GTA)

The Greater Toronto Area (Durham, Halton, Peel, Toronto and York) is expected to lead Canada's high-end real estate market, with strong demand anticipated for single-family homes over $1 million in particular. The GTA ended 2014 with 7,527 (condominium, attached and detached single-family) homes sold over $1 million, a 38% increase over 2013, then started 2015 on a strong note, with $1 million-plus home sales in January and February already at 997 units, up a combined 26% over the same period in 2014. A strong provincial economic forecast, expected gains in immigration and inter-provincial migration, strengthening consumer confidence and a continued shortage of home inventory over $1 million are expected to fuel a sellers' market, particularly for detached single family homes, which were up 31% in sales volume in January and February 2015 compared to the first two months last year. This is expected to have a positive, trickle-down effect on the attached home and condominium markets, as high-end homebuyers seek alternatives. Furthermore, Toronto's recent ranking as the best place to live in the Economist's 2015 Safe Cities Index, along with a lower Canadian dollar, only strengthens its global appeal as a destination for foreign real estate investment.

Montreal

Balance is anticipated for Montreal's high-end real estate market in spring 2015 as consumer demand and supply of available inventory over $1 million stabilize. In 2014, Montreal's high-end real estate market experienced significant gains, with home sales over $1 million increasing by 21% compared to 2013, totaling 434 (condominium, attached and detached single-family) homes sold. With marginal price increases expected for $1 million-plus properties, particularly when compared to the conventional market, healthy sales volume is anticipated with the majority of top-tier home sales projected in the $1 to 2 million single-family market. The lower Canadian dollar will also have a positive impact in the Montreal market by attracting additional foreign interest.

To download the full report on Canada's luxury real estate market performance in 2014, please visit: http://sothebysrealty.ca/blog/en/2015/01/07/2014-year-end-top-tier-real-estate-report/.

For more information and details on Sotheby's International Realty Canada visit www.sothebysrealty.ca.

About Sotheby's International Realty Canada

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Disclaimer

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 Affiliates for any loss or damage resultant from any use of, reliance on, or reference to the contents of this document.