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  • Greater Toronto Area’s luxury home price appreciation flat after two rounds of government intervention, while luxury condos make largest price gain

  • Good value drives demand for luxury detached homes in the Greater Montreal Area while high inventory in luxury condos limits price appreciation to 3.9 per cent

  • Calgary luxury condominiums buck the trend posting only year-over-year price decline

  • British Columbia’s 2018 budget dampens demand in Greater Vancouver’s luxury real estate market, ushering in buyer’s market

  • Consumer confidence releases pent up demand in Ottawa’s luxury home market as price appreciation show healthy gains

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    TORONTO, May 10, 2018 – Canada’s spring luxury real estate market is well underway in Canada’s largest cities. While sales in Greater Vancouver and the Greater Toronto Area (GTA) are significantly down in the first four months of the year, luxury home prices have remained relatively resilient, according to Royal LePage.

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    Overall, sales activity declined in Greater Vancouver and the GTA luxury real estate market as both sellers and buyers adjusted to federal and provincial measures affecting both domestic and foreign buyers. The introduction of the new mortgage stress test implemented by the Office of the Superintendent of Financial Institutions (OSFI) at the beginning of 2018 created market turmoil as buyers moved to the sidelines in order to gauge the impact on luxury home prices, similar to what was witnessed in the overall residential resale market. More significantly, in British Columbia, the 2018 provincial budget included policies targeting foreign and domestic buyers who do not pay tax in the province, as well as a tax increase for all homes over $3-million through increases to the property transfer and school tax. Similarly, the non-resident property tax included in Ontario’s 16-Point Fair Housing Plan dampened price expectations for the GTA region.

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    “Home prices in Canada’s luxury real estate market have remained remarkably resilient when you consider the economic headwinds that serial government interventions have created,” said Phil Soper, president and CEO, Royal LePage. “The resilience of home values reflects the strong aspirations of luxury buyers to reside and work in cities that are consistently ranked among the most desirable on the planet.”

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    During the first four months of 2018, price appreciation of a luxury condominium in Greater Vancouver and the GTA outpaced that of a luxury detached home, with median condominium prices rising by 7.0 per cent and 10.4 per cent year-over-year, respectively. For the same period, the median price of a luxury condominium in the Greater Montreal Area and Ottawa rose by 3.9 per cent and 4.0 per cent, respectively, while Calgary posted the only decline, decreasing 6.1 per cent.

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    The Greater Montreal Area posted the largest year-over-year price gain in the detached luxury home segment, increasing 9.1 per cent to $1,569,515 in the first four months of the year. During the same period, detached luxury homes in Ottawa (6.3%) and Greater Vancouver (5.2%) also saw prices rise, while home values in Calgary (0.6%) and the Greater Toronto Area (-0.2%) remained flat.

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    “Somewhat unusual in historical terms, and reflecting an important demographic shift happening across North America, appreciation in the luxury condominium market is outpacing the traditional target for large value residential property investment, the detached house,” said Soper. “Baby Boomers are finally exiting their large family homes, and luxury condos, with their low maintenance lifestyles, are the favoured destination.

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    “Contrary to popular belief, wealthy homebuyers are price sensitive too. They didn’t reach the point in their lives where they have the capacity to acquire high-value real estate without being financially astute,” concluded Soper. “Luxury condominiums represent value in today’s market.”

    Spring 2019 Forecast

    The momentum behind luxury condominium price growth is forecast to continue through the year and into the 2019 spring market in all cities surveyed, with the exception of Calgary. When broken out by region, the median price of a luxury condominium in the GTA is forecast to post the largest price gain, rising 8.0 per cent to $1,847,194 in the first four months of 2019 when compared to the same period in 2018. Over the same timeframe, luxury condominiums in both Ottawa and the Greater Montreal Area are forecast to increase 3.0 per cent. Calgary is the only city surveyed that is expected to see the median price of a luxury condominium dip in spring 2019 when compared to 2018, decreasing 4.0 per cent year-over-year.

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    Detached luxury home prices in Greater Vancouver are forecast to decline in the first four months of 2019,

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  • decreasing 3.0 per cent year-over-year to $5,619,153, while properties in this segment in the GTA are estimated to remain flat (0.0%) over the same period. The Greater Montreal Area and Ottawa are both forecast to increase 5.0 per cent year-over-year, and detached luxury homes in Calgary are expected to rise 2.0 per cent during the same period. 

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    Greater Vancouver 

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    British Columbia’s 2018 budget dampens demand for luxury real estate in Greater Vancouver, ushering in a buyer’s market 

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    Despite a sharp decline in sales activity, some price gains made during last year’s luxury spring market carried through to the start of 2018. For the first four months of the year, the median price of a luxury detached home in Greater Vancouver rose 5.2 per cent year-over-year to $5,792,941, while the median price of a luxury condominium rose 7.0 per cent year-over-year to $2,503,873 during the same period.

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    “The price appreciation that we are witnessing in Greater Vancouver’s luxury market this spring is largely a result of momentum being carried over from 2017,” said Soper. “In light of recently announced provincial tax policies to both foreign and domestic buyers purchasing homes in the Vancouver region, price appreciation in the luxury market is expected to decline in 2018 while sales volumes are expected to continue to be lower than recent norms.”

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    Looking ahead to the 2019 spring market, the median price of a luxury detached home in Greater Vancouver is forecast to decrease 3.0 per cent to $5,619,153, when compared to the first four months of 2018. In contrast, luxury condominiums are forecast to increase 2.0 per cent to $2,553,950 during the same period.

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    “Right now we are witnessing several factors insulate condominiums from the price declines we are seeing in the detached home market,” said Brock Smeaton, sales representative, Royal LePage Sussex. “Younger luxury buyers prefer condos for their affordability and little upkeep, while baby boomers increasingly prefer them as a downsizing option. Of course, this demand also catches the eye of investors who see rental opportunities.”

    During the first quarter of 2018, sales of detached luxury homes decreased 38.2 per cent compared to the same period in 2017, while luxury condominiums decreased 26.5 per cent[3].

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    “While Greater Vancouver’s luxury detached home market is showing year-over-year price appreciation, it is on a downward trend as the region continues to recover from policy announcements both within and outside Canada,” said Smeaton. “The region has seen less interest from foreign buyers since China tightened its policies on wealth leaving the country. More recently, the OSFI mortgage stress test and the 2018 B.C. budget, which contains a speculation tax as well as an increase to the property transfer tax and school tax for all homes over $3 million, will significantly affect foreign and domestic buyer activity in 2018.”

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    Smeaton added that the long-term outlook for luxury detached homes is positive for the region.

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    “Vancouver is one of the greatest cities in the world and while developers can create space to build a luxury condo, the opportunity to build detached luxury homes is limited because of the mountains,” said Smeaton. “For many local buyers who were only on the cusp of accessing the luxury market a few years ago, this unexpected relief in the market is a welcomed opportunity.”

    Luxury real estate segment price appreciation in Canada’s five largest cities (.pdf)

 

 About the Royal LePage Carriage Trade Luxury Properties Spring Market Release


The Royal LePage Carriage Trade Luxury Properties Spring Luxury Market Release provides information on the two most common types of luxury housing in Canada using lower thresholds of three times the median value of each segment relative to the overall property type’s median home value in that city. Housing values use company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing are provided by Royal LePage residential luxury real estate experts, based on their opinions and market knowledge.

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    Lower thresholds used for detached luxury homes: Greater Toronto Area ($3,046,206), Greater Montreal Area ($1,187,118), Greater Vancouver ($4,630,147), Calgary ($1,660,794), and Ottawa ($1,358,179). Lower thresholds used for luxury condominiums:  Greater Toronto Area ($1,454,446), Greater Montreal Area ($993,259), Greater Vancouver ($1,926,084), Calgary ($849,463), and Ottawa ($900,911).

    About Royal LePage

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    Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of close to 18,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting shelters for women and children as well as educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.

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    For more information visit: www.royallepage.ca.


     

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From a Studio Apartment to a Large Detached Home: What the Average Peak Millennial Can Afford Across Canada

  • The average Canadian peak millennial’s purchasing power dropped by approximately 16.5% ($40,103) after the introduction of the OSFI stress test
  • Peak millennials can expect 12% less living space on average in Greater Vancouver compared to last year
  • The footprint of a typical peak millennial property grew in the Greater Toronto Area as properties affordable to this demographic continued to move away from the city centre
  • A peak millennial can purchase a home in Moncton, New Brunswick for the cost of the 20 per cent down payment on a home in the market segment accessible to them in the Greater Toronto Area or Greater Vancouver 

April 2018 – According to Royal LePage, Canada’s leading real estate services provider, peak millennials[1] are seeing significant disparities in the properties they can afford in the country’s largest cities. With a median salary of $38,148[2], this generation typically has a maximum home buying budget of $203,246[3]. This factors in a 20 per cent down payment, and the impact of OSFI’s new stress test, which has reduced the average peak millennial’s purchasing power by approximately 16.5 per cent, or $40,103. However, given that the aggregate Canadian home value currently rests at $605,512[4], many must either bide their time or look for creative solutions to finance a home purchase.

In major cities across Canada, a growing number of peak millennials will save, pool their money with a partner and/or borrow funds from their parents, many of whom are downsizing in retirement and can financially contribute to their child’s first home purchase. While peak millennials are largely able to afford their monthly mortgage expenses, coming up with an adequate down payment often proves to be the greatest hurdle to homeownership among the demographic. In areas with high home values, like Greater Vancouver and the Greater Toronto Area, a 20 per cent down payment often equates to over $160,000, or roughly the same price as a home in Moncton, New Brunswick.

“We have seen a rare pause this year in the relentless rise in the cost of housing,” said Phil Soper, president and chief executive officer, Royal LePage. “In our largest cities, it is difficult for young people to purchase a home on a single household income. Some will purchase homes with family or friends, and some are following the age-old practice of saving money and waiting until they can effectively double their maximum budget with a life partner.”

When combined, a dual income peak millennial couple has a typical maximum budget of $406,479, exclusive of any help from the bank of mom and dad. In the first quarter of 2018, the average Canadian home listed between $325,000 to $425,000 (the price range of homes accessible to this dual-income demographic, with the higher end often receiving some financial assistance from their families) had 2.7 bedrooms, 1.8 bathrooms and 1,269 sq. ft. of living space. When broken out by region, homes listed between $325,000 to $425,000 in Greater Vancouver had an average of 1.5 bedrooms and 1.2 bathrooms, while homes in the Greater Montreal Area and the Greater Toronto Area offered peak millennial purchasers an average of 2.9 and 1.7 bedrooms and 1.5 and 1.4 bathrooms, respectively. Meanwhile, on the east coast, Halifax delivered the biggest bang for a peak millennial’s buck, offering them an average of 3.1 bedrooms and 3.0 bathrooms. In fact, of the seven cities studied across Canada, the region offered the most living space overall for prospective peak millennial purchasers, with homes in this price range averaging 1,736 sq. ft. In contrast, Greater Vancouver offered prospective peak millennial purchasers the least amount of living space with an average of 788 sq. ft.

“There are striking differences in the options available to peak millennial purchasers across Canada,” continued Soper. “While $425,000 will largely net an entry-level condo in Greater Vancouver and the Greater Toronto Area, on the east coast, this budget unlocks the majority of the market, offering prospective millennial purchasers large, detached homes with all of the bells and whistles.

Individual Peak Millennial Purchasing Power with an Annual Salary of $38,148[5] 

 

Before Stress Test

After Stress Test

Absolute Change

Percentage Change

Qualifying Interest Rate

3.09%

5.14%

2.05%

66.3%

Maximum Purchase Price

$243,349

$203,246

-$40,103

-16.5%

Maximum Mortgage

$194,679

$162,596

-$32,083

Associated 20% Down Payment

$48,670

$40,649

-$8,021

 
Peak Millennial Couple’s Purchasing Power with a Combined Annual Salary of $76,296[6]

 

Before Stress Test

After Stress Test

Absolute Change

Percentage Change

Qualifying Interest Rate

3.09%

5.14%

2.05%

66.3%

Maximum Purchase Price

$486,674

$406,479

-$80,195

-16.5%

Maximum Mortgage

$389,340

$325,183

-$64,157

Associated 20% Down Payment

$97,334

$81,296

-$16,038

Aggregate & Regional Home Attributes for Homes Between $325,000 and $425,000[7]
(For the three-month period ended March 31st)

City

Year

Beds

Baths

Living Space

Canada

2017

2.7

1.8

1,308 sq. ft.

2018

2.7

1.8

1,269 sq. ft.

Halifax

2017

3.1

2.4

1,787 sq. ft.

2018

3.1

3.0

1,736 sq. ft.

Ottawa

2017

3.0

2.2

1,487 sq. ft.

2018

2.9

2.3

1,495 sq. ft.

Calgary

2017

2.6

2.0

1,195 sq. ft.

2018

2.6

2.1

1,210 sq. ft.

Regina

2017

2.9

2.0

1,356 sq. ft.

2018

3.0

1.7

1,341 sq. ft.

Winnipeg

2017

3.0

2.0

1,482 sq. ft.

2018

3.0

2.0

1,413 sq. ft.

Greater Montreal Area

2017

3.1

1.7

1,468 sq. ft.

2018

2.9

1.5

1,344 sq. ft.

Greater Toronto Area

2017

1.6

1.4

816 sq. ft.

2018

1.7

1.4

856 sq. ft.

Greater Vancouver

2017

1.7

1.4

878 sq. ft.

2018

1.5

1.2

788 sq. ft.

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Reprinted with permission
 

 

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The Metro Vancouver housing market saw fewer home buyers and more home sellers in April.

 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,579 in April 2018, a 27.4 per cent decrease from the 3,553 sales recorded in April 2017, and a 2.5 per cent increase compared to March 2018 when 2,517 homes sold.

 

Last month’s sales were 22.5 per cent below the 10-year April sales average.

 

“Market conditions are changing. Home sales declined in our region last month to a 17-year April low and home sellers have become more active than we’ve seen in the past three years,” Phil Moore, REBGV president said. “The mortgage requirements that the federal government implemented this year have, among other factors, diminished home buyers’ purchasing power and they’re being felt on the buyer side today.”

 

There were 5,820 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in April 2018. This represents an 18.6 per cent increase compared to the 4,907 homes listed in April 2017 and a 30.8 per cent increase compared to March 2018 when 4,450 homes were listed.

 

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 9,822, a 25.7 per cent increase compared to April 2017 (7,813) and a 17.2 per cent increase compared to March 2018 (8,380).

“Home buyers have more breathing room this spring. They have more selection to choose from and less demand to compete against,” Moore said.

 

For all property types, the sales-to-active listings ratio for April 2018 is 26.3 per cent. By property type, the ratio is 14.1 per cent for detached homes, 36.1 per cent for townhomes, and 46.7 per cent for condominiums.

 

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,092,000. This represents a 14.3 per cent increase over April 2017 and a 0.7 per cent increase compared to March 2018.

 

Sales of detached properties in April 2018 reached 807, a 33.4 per cent decrease from the 1,211 detached sales recorded in April 2017. The benchmark price for detached properties is $1,605,800. This represents a 5.1 per cent increase from April 2017 and a 0.2 per cent decrease compared to March 2018.

 

Sales of apartment properties reached 1,308 in April 2018, a 24 per cent decrease from the 1,722 sales in April 2017. The benchmark price of an apartment property is $701,000. This represents a 23.7 per cent increase from April 2017 and a 1.1 per cent increase compared to March 2018.

 

Attached property sales in April 2018 totalled 464, a 25.2 per cent decrease compared to the 620 sales in April 2017. The benchmark price of an attached unit is $854,200. This represents a 17.7 per cent increase from April 2017 and a 2.3 per cent increase compared to March 2018.

 

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The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.