Canadian housing prices may be moving further and further out of the middle class’s grasp – but the “mansion market” – the sales of homes priced $1 million or more – continues to boom. It would appear Canada’s high-net-worth homeowners have shaken off any post-recession slumber, with growing appetites for real estate investment.
Sales of luxury homes – including single family, attached homes and luxury condos – shot up in the first half of 2014, according to a report from luxury real estate agency Sotheby’s International Canada.
Unsurprisingly, the biggest spike in sales came from Canada’s largest urban centers, Vancouver, Toronto, Calgary and Montreal, which all saw double digit gains. In total, these four cities saw about 6,400 homes listed above $1 million change hands, including nearly 275 that sold for over $4 million.
Both Vancouver and Toronto saw a 34 per cent rise in sales, Calgary a 17 per cent spike and Montreal sales rose 11 per cent in the first half of the year – a trend Sotheby’s expects will continue.
Hey, Big Spender
Growing consumer confidence, aided by historically low lending rates, are helping to fuel the trending demand for high-priced housing.
Toronto is looking particularly hot, with prices there expected to jump 8.1 per cent year over year, according to Royal LePage’s House Price Survey and market forecast. Luxury condos are flying off the shelves – it seems the higher the asking price, the more buyers are willing to compete. Among luxury units listed between $1-and-2 million, 36 per cent sold for more than the asking price, and 41 per cent of those priced between $2-and4 million went for more. Every condo listed above the $4-million threshold went for more than asking.
The Canadian Real Estate Associations reports home sales reached a level in June not seen since March 2010, pushing the national average home price to around $413,215, a seven per cent rise compared to the same time last year.
Vancouver holds the title for most expensive sale, with a mansion listed at $15 million, which is hardly shocking given the city’s reputation for expensive living.
You Better Pay Out of Pocket
Have your sights set on that gargantuan property with included swimming pool and tennis court? Don’t expect to do it on debt alone. As of August, the taxpayer-backed Canadian Mortgage and Housing Corporation will cease insuring houses worth more than $1 million, even if the buyer is able to stomach a 20 per cent down payment.
However, considering coverage for this high-priced buyer segment represent a mere 3 per cent of the loans it backed last year, it would seem the upper class isn’t in dire need of the support.