According to a new report, Vancouver’s real estate market might begin to see luxury home prices drop as we move on to spring of next year.
“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 of 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.”
In the first four months of 2018, the average value of a luxury home rose by around $300,000, peaking the price to nearly $6 million before settling at a steady pace.
While during that same period, the average value of luxury apartments rose by seven per cent since 2017, reaching an average price of $2.5 million.
“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,” Soper said.
2018 was also the same year the provincial government introduced policies such as the speculation tax where it will be collecting $30 million in revenue and the school tax that sparked controversy, where a tax increase will be implemented to every home that’s valued at $3 million or over.
“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,” he said.
While Luxury homes could start seeing a soft decrease to their prices next year, demand for more luxury apartments continue to escalate.
“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 for 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,” he said
According to the release, sales of luxury homes decreased by almost 40 per cent during the first quarter of 2018 compared to the same period in 2017, while condos only decreased around 25 per cent.
Smeaton said that the long-term outlook for luxury detached homes is positive for the region.
“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.”
Meanwhile in the eastern part of Canada, Royal LePage says Toronto will not be looking at a price decrease in their luxury homes, but will instead remain flat, and see a value-increase to their apartments by about $140,000.
Canadian real estate agency Royal Lepage said Thursday that the median Vancouver luxury home could be looking at a price decrease of nearly $180,000 by the beginning of 2019.
Currently, sales in Greater Vancouver have gone “significantly down” according to Royal LePage, but luxury home prices continue to remain steady.