National Overview Luxury real estate market shows strong and stable growth in

Canada’s major cities.

Amidst economic uncertainty, fluctuating interest rates and threats of recession, Canada’s most sought after premium markets are not faltering. Across the country, the story is one of market stability and sustained demand for a shrinking pool of property.

In Halifax, single-family homes over $1 million comprise close to 10 per cent of the market now, compared to 4.6 per cent 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 per cent 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 per cent 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 per cent from February 2022’s high-point.

Homes now viewed as generational assets by Canada’s high-net worth real estate owners

In Europe, it is typical for real estate to be passed down within families, especially in cities with international demand. Intergenerational wealth transmission through passing on family property is gaining momentum in Canada, especially as younger generations lose their purchasing power for property assets. This trend is influenced by a number of factors, including property scarcity, unaffordable pricing for first-time home buyers and a lack of appropriate inventory for baby boomers to downsize.

Baby Boomers expected to downsize are staying put

Engel & Völkers advisors across Canada are reporting that baby boomers seeking to downsize are changing their minds. After observing current market conditions, they are opting to stay put because they cannot find suitable inventory to purchase, such as large condos and singlelevel bungalows. Others who would typically rent are opting not to because of the staggering rise in rental prices in major cities nationwide. This mismatch in the real estate market will affect the home supply cycle for years to come, and boomers will continue to be the biggest movers and shakers in the real estate market ecosystem.

Millennials without parents as a financial resource are priced out

Baby boomers are shelling out more money than usual to support their children, who are struggling to cope with high living costs. In these cases, many baby boomers feel it does not make sense to finance rent, as rent payments are almost equivalent to a mortgage payment. Instead, parents are increasingly helping their children finance homes through large sums of money for mortgage down payments and monthly payments. This is not a new trend, but the sums of money being gifted are getting larger. Although transferring wealth earlier than expected affects some baby boomers’ retirement plans, they still see this as a “smart money” move. They are motivated by the certainty that real estate remains seen as a good investment, offering more long term profit and stability than the stock market — and they want this stability for their children. They understand that wealth transferred today will bring more opportunities than if it is transferred later.

10% The percentage of single family homes listed over $1 million in Halifax

Shovel-ready land and labour shortages in key Canadian cities

It’s no secret that home affordability in major Canadian cities has been a challenge for many years. One of the biggest factors contributing to this issue is the historically low supply of available homes. Adding to it is also a shortage of buildable land in cities like Toronto, Montréal and Vancouver. A recent study conducted by the Toronto Metropolitan University’s Centre for Urban Research & Land Development1 reports a severe shortage of shovel-ready land for ground-related housing in the Greater Golden Horseshoe. In Vancouver and Montréal, developers face similar challenges, coupled with an increasingly difficult operating environment seeing higher costs for labour and materials. A new survey of the Canadian construction industry by KPMG² revealed 86 per cent say that the shortage of skilled labour or trades is impacting their ability to bid on projects and/or meet project deadlines. This jumps to 90 per cent in British Columbia and 94 per cent in Quebec.

Foreign buyer ban affecting high-profile athletes and executives

Engel & Völkers has found the foreign buyer ban (formally known as the Prohibition on the Purchase of Residential Property by Non-Canadians Act) is having unintended consequences on high-profile professional athletes and executives, despite the federal government introducing amendments to the act, allowing some work permit holders to purchase homes and vacant land. Regardless of these amendments, provincial taxes such as the 25 per cent non-resident speculation tax in Ontario, continue creating barriers for high-net-worth professionals who desire to purchase a home while working in Canada. Instead, these professionals are essentially being forced to rent. In the long run, this could create friction for organizations attracting top-tier global talent to Canada.