Vancouver’s $4m-Plus Home Sales Drop 52%

Annual drop is steep, but high-end market is already recovering, according to Sotheby’s report
Joannah Connolly
July 11, 2017

Metro Vancouver’s “top-tier” home market saw a significant drop in transactions in the first half of this year, when compared with the scorching-hot first six months of 2016, according to Sotheby’s International Realty Canada’s 2017 Mid-Year Top-Tier Real Estate Report.

The bi-annual luxury market report, released July 11, said that Metro Vancouver homes priced $4 million and over fell 52% in terms of sales volumes between January and June, compared with the same period last year.

Sales of homes priced $1 million or more declined by 23% year-over-year, taking activity back down to approximately the levels seen two years previously.

“However, monthly data from the beginning of 2017 revealed uneven performance in top-tier real estate activity, as the market shifted from a period of clear uncertainty earlier in the year to resumed market participation by May 2017,” the report authors added. “Although the $1 million-plus market slowly regained traction as months progressed, affordability remained a flashpoint for Vancouver homebuyers as prices continued to rise.”

Month-by-month, the statistics reveal a fluctuating market that grew stronger as the first half went on, but dropped again as the summer lull hit in June. Sales of $1 million-plus homes dropped 42% year-over-year in both January and February, whereas March and April sales were down a more modest 31% and 14% year-over-year respectively. In May there was just a 6% annual decrease, but June sales of $1 million-plus homes fell 18% year-over-year.


Sotheby's Top Tier Sales July 2017


Housing Type Breakdown

As is ever the case, the market numbers vary significantly between housing types.

There were 648 sales of $1 million-plus condos in the first half of 2017, a slight year-over-year rise of 5%. Luxury condos sales over $4 million fell 47% year-over-year to 17 units sold between January 1 and June 30, 2017, but this figure is small enough to be wildly variable.

Sales of attached homes (such as townhomes and duplexes) over $1 million fell 12% to 358 units in the first half of 2017 from the same period a year prior.

Single-family home transactions over $1 million fell 34% year-over-year in the first half of 2017 to 1,379 units sold, while $4 million-plus detached home sales declined 53% year-over-year with 191 properties selling in the first half of 2017.

The report concluded, “Vancouver’s top-tier market is expected to regain tentative, albeit inconsistent traction in key segments, particularly in the condominium market.”

Nationwide Activity

The Greater Toronto Area saw a booming top-tier market from January to June this year, with $1m sales gains of 41% year-over-year, while luxury sales over $4 million surging 93%. However, the introduction of the foreign buyer’s tax in the GTA by the Ontario government in April put the brakes on market activity, with May and June top-tier sales cooling.

“New market dynamics emerged in metropolitan luxury real estate markets across Canada in the first half of 2017,” said Brad Henderson, president and CEO of Sotheby’s International Realty Canada. “There were several underlying factors that contributed to these shifts. Amongst them were the ongoing repercussions of recently implemented policy interventions in the high demand and low supply Toronto and Vancouver markets, as well as bolder economic and consumer confidence in both Montréal and Calgary, which ultimately strengthened the top-tier real estate markets in these regions.”

With no foreign buyer tax currently in place, Montréal is emerging as a leading real estate investment destination for overseas buyers. The city will surpass Vancouver this year as the Canadian destination for mainland China-based real estate investors, according to a recent survey by China’s largest foreign-market real estate portal

Henderson also said that he did not think a slight interest-rate increase, widely anticipated to be announced tomorrow (July 12), would dampen the $1 million-plus market. He told the Canadian Press that high net worth individuals are less affected by interest- rate rises than Canadians who spend more of their income on housing costs.

However, if the rate increases are significant, such as 100 or 200 basis points, there will be a “dampening effect” on all real estate across Canada.

“Unfortunately interest rates are not a very exact tool,” said Henderson. “They are a very blunt instrument, and it will have the same effect on markets that aren’t quite as frothy as Toronto and Vancouver.”

Joannah Connolly
Joannah Connolly is editorial director of Glacier Real Estate, Glacier Media's real estate division. Joannah writes and curates real estate news for Glacier Media's local newspaper websites, including the Vancouver Courier, North Shore News, Burnaby Now, Tri-City News and others. She also oversees editorial content in Real Estate Weekly Homes, West Coast Condo, Western Investor and Glacier's special real estate publications. A dual Canadian-British citizen, Joannah has 22 years of journalism and editing experience in Vancouver and London, with a background in construction, architecture, healthcare and business media. Joannah has appeared on major local TV outlets as a real estate commentator, has moderated and spoken on various industry panels, and spent two years hosting the Real Estate Therapist radio show on Roundhouse Radio.