MONTREAL – Canada’s luxury home market is expected to perform as well, or better this year than in 2012, with the exception of cities like Montreal and Vancouver, where improved sales have been delayed by “economic concerns, diminished demand and higher inventory levels,” a report by RE/MAX says.
While sales were aversely affected by weather during the first three months of 2013, about half of Canada’s 16 major markets bounced back in March and are expecting a strong “traditional spring market,” the RE/MAX Upper-End Report published Tuesday morning said.
In Greater Montreal, sales of high-end homes dropped 15 per cent during the first quarter of 2013, compared to the record-breaking first three months of 2012, where 251 houses worth $750,000 or more were sold, the report said.
“Luxury sales remain strong when examined in a historical context,” says Sylvain Dansereau, executive vice-president, RE/MAX Québec, in a news release. “We may not be setting records to the extent that we saw in 2012, but solid demand and confidence continue to underpin the upper-end segment – best illustrated by the new benchmarks set in more than one-third of all markets examined.”
In Montreal, a softer condo market, where inventory has steadily grown over the last few quarters, could force sellers to lower prices in 2013.
“While many new units are being successfully absorbed into Montreal’s rental pool, the oversupply could point to further price adjustments down the road if conditions do not improve,” the report warned. “With Greater Montreal’s recent budget clearly demonstrating a tone of fiscal restraint and with slower economic growth in place, it is expected that the momentum in Greater Montreal’s upper-end market will continue to contract. Yet, sales should still prove quite healthy by year end, remaining above the five-year average.”
Calgary had the strongest first quarter, where sales of homes worth $1 million or more in the commodity-fueled market soared 50 per cent over the record-breaking first three months of 2012, when 115 houses changed hands.
Re/Max defines luxury homes in Canada at a lower price point than Sotheby’s International Realty Canada, which published its own report on the state of the high-end market earlier this month. Re/Max, which uses multiple listing service data – and unlike Sotheby’s doesn’t include sales it handles privately – defines a high-end home in Greater Montreal as one that sells for at least $750,000 in Greater Montreal, or $ 1 million on Montreal Island.
A high-end home in Greater Vancouver would sell for $2 million or more, while a high-end home in Greater Toronto would sell for $1.5 million.
After a record-breaking 550 luxury sales in Greater Vancouver during the first quarter of 2011, “demand has returned to more sustainable levels, and we suspect that’s where it will remain going forward,” says Elton Ash, regional executive vice-resident, RE/MAX of Western Canada. Sales dropped 29 per cent in Vancouver’s luxury market during the first three months of 2013, compared to the 404 homes sold in 2012.