2023 Mid-Year Canadian Luxury Market Report

Engel & Völkers is excited to share our 2023 Mid-Year Canadian Luxury Real Estate Market Report. This report combines market data with intel from Engel & Völkers’ local Canadian market experts. The result is a residential property analysis covering the markets in Halifax, Montréal, Ottawa, Toronto, and Vancouver. 

The report shares insights on what’s happening inside Canada’s top real estate markets, including notable trends, in-demand neighborhoods, economic factors, and changing buyer and seller preferences in two different price segments; $1-$3.99 million and over $4 million. 

This year’s analysis reveals that amidst economic uncertainty, fluctuating interest rates, and forecasts of recession, Canada’s most sought after premium markets are demonstrating resilience.

Click here to access the full report.

The luxury real estate market shows strong and stable growth in Canada’s major cities.

• In Halifax, single-family homes over $1 million comprise close to 10 percent of the market now, compared to 4.6 percent for all of 2022. 
• Montréal’s home values in Westmount and Outremont have now grown by nearly $1 million throughout a 10 year period. 
• In Ottawa, prices for homes valued between $1 – 3.99 million grew by three percent from January to June 2023. 
• In Toronto, the average sold price for residential class homes priced between $1 – 3.99 million grew by 3.7 percent compared to January 2023. 
• In Vancouver, sellers’ ‘sit and wait’ attitude sees average home prices in the $1 – 3.99 million segment hold their value, dipping by only 5.59 percent from February 2022’s high-point. 

MARKETS AT A GLANCE 

Halifax

By mid-year 2023, single-family homes over $1 million comprise close to 10% of the market, compared to 4.6% for all of 2022.

The Halifax Regional Municipality (HRM) continues to be one of Canada’s most important real estate markets to watch. Over the past year, the city has experienced a consistent influx of buyers, including many remote workers, who are attracted to Halifax’s affordability and natural beauty. 

“Halifax’s population sat at 480,523 as of January, and we are on a trajectory to reach 1 million people by 2025. Of new residents to Halifax, 74.4% were aged 15-44, the largest segment of this age group ever recorded. Many originate from Ontario, Vancouver and Alberta, and have built home equity in these markets. This is translating into multiple offers in the $1 – 3.99 million market, as well as across the conventional market.”

–Donna Harding, License Partner, Engel & Völkers Nova Scotia 

So far in 2023, there were 250 single-family homes listed in Halifax over $1 million, comprising 9.4 percent of the market. This compares to 164 for all of 2020, comprising 2.4 percent of the market. In the first half of the year, the average price for a residential class home in the $1 – 3.99 million bracket was $1,344,279.

Halifax remains a seller’s market for homes priced between $1-3.99 million. Homes priced over $4 million are categorized as a buyer’s market, which is typical for this price point. Engel & Völkers expects the market pace from the first half of 2023 to continue into the second half of the year, sparing a six to eight week lull due to the wildfires. Halifax’s growth projections and limited supply suggest it will continue to be a strong seller’s market.

Record-breaking migration has left Halifax’s market in a bind, as some sellers looking to downsize are unable to find suitable options, leading to a market gridlock. 

Low inventory of available homes for purchase will continue to define the Halifax market, with a primary concern revolving low rental inventory. To address the supply gaps, there is a need for purpose-built rental properties in Halifax, as new construction is being absorbed expeditiously and cannot keep up with the roaring demand from Halifax locals and newcomers.

Montreal 

Home values in Westmount and Outremont have grown by nearly $1 million over 10 years.

After a rocky start to the year with a lack of buyers and sellers, Montréal’s housing market is displaying signs of normalization. Buyers are showing more confidence following interest rate stabilization and, as a result, are coming out to shop. 

From January to June 2023, the average sales price for residential class homes in the $1 – 3.99 million segment was $1,462,568, while the average price for a condo in this range was $1,334,534. There were 12 residential class properties sold for over $4 million in notable sales, averaging $5,012,708. The most expensive property in this range sold in March for $5,775,000 in the Ahuntsic-Cartierville neighborhood. For condos in this price range, three units were sold and the average price from January to June combined was $1,099,188.

Engel & Völkers predicts that Montreal’s housing market will continue moving towards a balanced state in the second half of the year, and will remain relatively stable. However, it is unlikely to shift fully in favor of buyers.

“Last year, we consistently saw record-breaking sale after record- breaking sale. These buyers made home purchases that they intend to live in long-term. That means many of the properties sold during this period will not come back to the market for another 20 years and premium supply will be constrained. Montréal is like Manhattan, it’s an island, and there are only so many places one can go.”

–Patrice Groleau, License Partner,  Engel & Völkers Montréal 

The low supply of available properties will continue to be a defining characteristic of the market, becoming a prominent topic in upcoming political races. The significant gap in supply between the conventional and premium markets is an important trend to watch. Montreal is currently experiencing a shift, and the economic divide is growing. While new condo projects are entering the market, many middle-class buyers still have a preference for freehold homes, which may need to change.

Engel & Völkers remains optimistic about a return to the typical pre-pandemic real estate cycle. As the market adjusts, it will be essential to work with experienced real estate professionals who specialize in property pricing and negotiation.

Ottawa

Luxury real estate growth projected for the remainder of 2023, as homes are valued between $1 – 3.99 million grew by 3% from January to June 2023.

Ottawa’s housing market continues to be one of the fastest-growing for premium real estate, offering affordability, strong investment returns, and market stability. This makes it attractive to investors and families looking to lay down long-term roots. The market still faces challenges however, potentially due to buyer hesitation caused by higher mortgage interest rates and inflation.

While home prices in the conventional market have trended downwards, the premium segment has seen growth. From January to June 2023, the average sale price for residential and condo-class homes in the $1 – 3.99 million bracket increased to $1,362,852, a 3.18 percent rise compared to the previous year’s average over the same period of $1,320,835. There were three notable sales of rare homes priced over $4 million in January for $6,300,000, February for $4,220,000 and May for $4,500,000.

Many listings in Ottawa are approaching the $4 million threshold, with prices ranging from $2.5 to $3 million. The most in-demand premium price range falls between $1.5 to $2.5 million. Properties priced competitively between $1.3 to $2.2 million tend to sell quickly, typically within one to two weeks. Although Ottawa’s luxury market is still developing compared to Toronto and Vancouver, there are promising signs of continued growth.

Engel & Völkers is forecasting the current upswing will continue to show strength over the rest of the year. This indicates a return to a more traditional seasonal pattern, which is reassuring for buyers and sellers hoping to transact in the latter part of 2023. In Ottawa, buyers and sellers are slowly adjusting to these new, more stable conditions, and it is anticipated the market will firm up over the next four to six months. The $1 – 3.99 million market remains a seller’s market. The $4 million-plus market is a buyer’s market, which is typical for this price point.

The housing market is characterized by a degree of uncertainty, especially in light of changing Bank of Canada interest rates and forecasts of recession. An area to watch in Ottawa’s housing market is high-end rentals. Many property owners are opting to lease their assets instead of selling, resulting in an increase in the number of high-end rental properties. However, some buyers are facing challenges in finding properties that meet their requirements, while certain sellers are hesitant to engage in transactions due to current market conditions.

Nonetheless, there are indications some of these sellers are beginning to reconsider their positions, as prices have shown an upward trend. It remains to be seen how the market will stabilize and what impact this will have on rental figures. It is reassuring to note many sellers possess the necessary financial resources to place tenants in their properties while they await the opportune moment to sell.

Toronto

In June the average sold price for residential class homes priced between $1 – 3.99 million grew by 3.7% compared to January.

While Toronto’s real estate market is stabilizing after years of rapid growth and seasonal pattern disruptions, the normalization process is being hampered by a lack of supply due to high demand for housing in the fast growing capital city. Despite recent interest rate hikes, the impact on market value has been minimal due to this ongoing inventory problem, and prices remain stable. New supply continues to be constrained, meaning the Greater Toronto Area (GTA) will likely continue to experience a housing shortage in the years ahead.

Dedicated offer dates are becoming more common in the current market, with many single-family homes selling over asking in multiple offers. Single-family homes listed for $999,999 are commonly sold on an offer date for around $1,300,000. Some sellers are adjusting their approach based on market activity, leading to multiple buyers bidding for homes. These factors make it crucial for buyers to work with experienced professionals and to remain flexible and well-informed throughout the home-buying process, especially in a challenging negotiation market.

Residential class homes priced over $4 million in Toronto are selling at a slower pace. Buyers in this bracket tend to think long-term, which makes them less hesitant to make a purchase based on today’s market conditions. The number of units sold in this price bracket has consistently grown in the first half of the year, from 17 in January to a high of 54 in May. Ten units priced above $8 million have been sold since January. Engel & Völkers reports that homes priced from $10 – 20 million are selling at a slower pace than usual, with increased days on market. From January to July 2022, these homes spent 40 days on the market with seven sales, while during the same period in 2023, days on market increased to 112, with five units sold. Rentals catering to this market are also trending upward, likely influenced by the decline in purchasers, which can be attributed in part to Canada’s foreign buyer ban.

Engel & Völkers is forecasting Toronto’s summer market will sustain a slow activity pace. The summer months may present a good opportunity for buyers as there will be less competition than in spring. With less competition and a potentially more relaxed atmosphere, buyers might be able to find the right property without feeling too overwhelmed. It is important to keep in mind that even in the summer, there will still be multiple offers and competition for desirable properties.

At the end of the first half of 2023, the $1 – 3.99 million property segment in Toronto remains a seller’s market, while the $4 million-plus market is balanced. Toronto’s census metropolitan area has a population of 6,372,000, with a growth rate of 0.93 percent. Despite some outmigration for affordability reasons, an influx of individuals attracted to urban amenities keeps the growth rate consistent, making Toronto one of the fastest-growing cities in North America.

Vancouver

Sellers’ ‘sit and wait’ attitude had a minimal effect on average home prices in the $1 – 3.99 million segment, which dipped by only 5.59% from February 2022’s high-point.

In Vancouver, the first half of 2023 was marked by uncertainty, as buyers and sellers held off on real estate decisions pending the Bank of Canada’s interest rate announcement. Once rates were held steady in February, buyers regained confidence and returned to the market, but sellers were slower to respond, resulting in an imbalanced market.

The spring market presented a conundrum for sellers, especially for the majority who wanted to level up or downsize. Where sellers were confident they could sell their home quickly, they did not have the same belief they would find a suitable replacement. This tension between seller hesitancy, and strong buyer demand, led to price increases not only in the conventional market but also in the premium segment. For instance, North Vancouver now has more residential class inventory in the $4 – 6 million range, which was previously uncommon. Similarly, East Vancouver has inventory priced around $2 million, surpassing the typical high $1 million range.

For residential class homes priced $1 – 3.99 million, the average sold price consistently increased month-over-month from January to June 2023. The highest average price of $2,038,395 was recorded in May, representing a 1.3 percent decrease compared to the previous year. Condo-class homes in this price range averaged $1,404,413. 

In the first half of 2023, the combined average sold price for homes and condos in the $1 – 3.99 million range was $1,675,485, reflecting a 7.22% decline compared to the same period in 2022. A total of 6,047 units were sold in the first half of 2023, down from 8,085 units in the equivalent period in 2022.”

“High-demand in the mid-market makes this a great time for sellers who want to level up. We’re advising clients to take advantage of market conditions favoring sellers in the middle market, and the tempered demand in the upper market, which is balanced.”

–Andrew Carros, Chief Operating Officer Engel & Völkers Vancouver

Engel & Völkers anticipates a summer slowdown, in line with historical seasonal patterns, as buyers and sellers tend to be preoccupied with weather and vacations. Rising interest rates may keep sellers on standby, while buyers approach deals with some caution.It is difficult to accurately assess whether the current market is a true seller’s market for homes priced at $1 – 3.99 million because the number of units for sale on the market is so low. If inventory was at the same level as in 2021 or 2022, the market would be closer to balanced.

For Vancouver, it’s important to work with a professional that can help differentiate between real-time market conditions and the surrounding chatter. A key to success will be to pay attention to personal financial and lifestyle situations when making decisions in the current market. 

Engel and Völkers’ 2023 Year End Canadian Luxury Real Estate Market Report reveals the resilience of Canada’s premium real estate market amidst economic uncertainty. The report offers valuable insight into market preferences, economic factors, and evolving preferences for buyers and sellers in Canada’s most sought-after neighborhoods.

Explore the full version of the report below.

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