Engel & Völkers: Demand for Luxury Properties Surges as Curve Flattens
Engel & Völkers reports a spike in demand for luxury real estate as Canadians emerge from lockdown. Its newly released Mid-Year 2020 Canadian Luxury Real Estate Market Report finds adaptation to the new ‘normal’ is causing Canadians to rethink how they live and seek out spaces that offer flexibility between work and leisure while staying home.
Demand for luxury properties is spiking as the curve flattens in Canada. The pandemic is causing a shift as people seek out homes accommodating all daily activities as people continue to stay home. Low inventory is driving up prices in major metro areas. Amidst stock market fluctuations, Canadian real estate is proving to be a solid investment. Virtual tours have proven to be a valuable tool for vetting real estate, and Engel & Völkers is reporting the virtual element is here to stay.
The market report provides an analysis on residential real estate through April, May and June across five markets including Halifax, Montréal, Ottawa, Toronto and Vancouver. It discusses luxury real estate across three price segments of under $1 million, $1-4 million and over $4 million as listed in the Multiple Listing Service (MLS).
Canada proved resilient within all major metropolitan markets showing stark improvements following a significant pause by COVID-19. Despite April being marked by generational lows, May and June quickly rebounded showing positive trends in overall home sales, prices and consumer confidence. Busy spring markets have shifted into the summer and optimism is on the rise nationally.
This year, Engel & Völkers saw a 30 per cent year-over-year increase in closed sales volume and 28 per cent year-over-year increase in average sales price across Canada from January to June 2020. This growth signifies the strength of the luxury segment during the unprecedented times and economic stress associated with COVID-19.
“Canadian markets are proving their resiliency. Demand in Halifax, Toronto, Vancouver, Montréal and Ottawa held through the pandemic, with high-demand price points selling quickly with multiple offers,” said Anthony Hitt, president & CEO, Engel & Völkers Americas. “COVID-19 has caused Canadians to rethink how they want to live, causing a shift in buyer preferences and habits in real estate. This is reflected in rising demand for properties with flexible living spaces to meet both work and lifestyle needs and amenities such as pools, entertainment rooms and outdoor living spaces and entertainment spaces. We’re seeing a trend toward cottage country and the suburbs, creating a temporary buying opportunity within the urban condo market as people prioritize properties with more space.”
Engel & Völkers is highlighting Halifax as a market to watch, categorizing it as a ‘perfect storm’ seller’s market due to a combination of market conditions. Ocean views, an entrepreneurial ecosystem, strong value and low interest rates are manifesting into unprecedented domestic and international demand.
Montréal’s luxury segment is seeing multiple offer situations even as some residents look to purchase second homes in the countryside. Despite a full two-month stop in real estate during COVID-19, the market rebounded quickly in May with June closing at record price gains. Single-family homes and plexes grew 12 per cent in median prices while condos jumped 17 per cent year-over-year. The market is also seeing continued international interest with Engel & Völkers reporting an influx of inquiries from French-speaking countries during Q2.
Ottawa proved to be an outlier with the healthiest rebound and biggest price gains as a result of its sustained stable economic environment during the pandemic. Multiple offer situations continue to grow on tight inventory with 56 per cent of listings sold over asking in June compared to 43 per cent in May. These conditions resulted in a steady price incline with June seeing house prices rise 15 per cent and condo prices rise 17 per cent year-over-year – the highest across all major Canadian markets.
Toronto maintained a balanced market during Q2 as supply and demand fell in tandem. Recovery began in May and progressed further in June with a pick-up in overall housing activity. This resulted in a shift to a seller’s market, especially in the detached and semi-detached markets. A slowdown in condo activity is creating a buying opportunity in Toronto’s downtown core. June residential home benchmark prices were up 11.9 per cent year-over-year with the strongest price growth in the detached and semi-detached segments, up 14.3 per cent and 22 per cent respectively.
Through COVID-19, health and safety was the top priority for people living in Vancouver. Lockdown measures worked, and Vancouver’s exceptional performance during the pandemic made headlines globally. This success is positioning it as a prime place to relocate for safety and livability. It is forecasting an influx of international buyer interest once it is safe for travel.
Engel & Völkers operates a global network of over 12,000 real estate professionals in more than 30 countries. For more information, visit www.evrealestate.com.