Montreal luxury hot spot

Photo: The Canadian Press

Montreal is emerging as a luxury real estate "hot spot," while Vancouver and Toronto sales should pick up this fall after somewhat sluggish times, according to a new report.

Sotheby's International Realty Canada's rosy outlook comes despite a slew of policy changes, including some from Ottawa and a couple provincial governments designed to cool the country's hot housing markets. However, Canada's strong economic performance will boost the market in the coming months, says the real estate sales and marketing company.

"The psychological confidence that people had in the marketplace was shaken by all of the different factors that were put in there," said Brad Henderson, CEO of Sotheby's International Realty Canada, of a recent drop in sales in properties of more than $1 million in Toronto.

In July and August, sales of condominiums and houses over $1 million in Toronto fell 27 per cent compared to the same months the year before, according to the report. Transactions of properties over $4 million in the city fell by nearly the same amount — 28 per cent.

Part of that drop came as buyers and sellers in Ontario grappled with a new 15 per cent tax on foreign buyers of properties in the Greater Golden Horseshoe Region, which includes Toronto and several nearby areas, introduced by the provincial government in late April.

Ontario followed British Columbia's footsteps in the policy. The B.C. government implemented a similar levy on foreign buyers in the Metro Vancouver area in August 2016, and the province experienced a drop in luxury property sales shortly thereafter.

In Vancouver, the report says, sales of luxury real estate over $1 million dropped 23 per cent in the first half of the year compared to 2016. But, sales increased five per cent during July and August, compared to the same months last year.

Sotheby's anticipated the Toronto market would pull back not only due to the impact of its foreign buyers' tax, but also because of a move to stricter lending rules by the federal government last year, and two recent hikes in the benchmark interest rate from the Bank of Canada.

In Montreal, sales of condominiums and homes over $1 million jumped 60 per cent year over year this July and August.

Sotheby's forecasts Montreal will "emerge as a strong leader on Canada's luxury real estate landscape this fall," according to the report.