Amidst government interventions, rising mortgage rates, and declining sales activity within the Greater Toronto Area (GTA), luxury condo prices have remained comparatively resilient. According to new figures released last week by Royal LePage, luxury condo prices outpaced luxury detached homes in the GTA over the first four months of the year, with average prices rising 10.4 per cent.

Sales activity across the GTA have been dwindling as both buyers and sellers adjust to new federal and provincial cooling measures implemented earlier in the year. In April 2017, the province introduced a 15 per cent tax on foreign buyers on home prices across the GTA and the Golden Horseshoe Area. As of January, Canada’s banking regulator implemented a stress test making it more difficult for buyers to qualify for mortgages. In the wake of these new government policies, Phil Soper, President and CEO of Royal LePage, notes how Canada’s home prices in the luxury housing market have remained consistent considering the effects of the strategies implemented. “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. 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.”

While prices have increased, the number of transactions for luxury detached homes during the first quarter of 2018 fell 67.9 per cent when compared year-over-year, luxury condo sales also saw a decline of 28.1 per cent when compared over the same time period. However, according to Jason Mercer, Toronto Real Estate Board’s Director of Market Analysis, last year should be considered an outlier year, as Toronto was in the middle of a housing bubble. The decline in the luxury detached home sales were more modest when compared to the same period in 2016 (-18 per cent). Luxury condo sales, when compared to 2016, saw an increase of 90.6 per cent. When forecasting ahead to 2019, the average price of a luxury condo in the GTA is forecasted to increase 8 per cent, year-over-year to $1,874,194. “Our longer-term forecast for the GTA real estate market, including the luxury market, is for healthy price appreciation. The region has experienced significant inventory shortages for many years, has a robust economy, and an international reputation as a great place to live and work,” states Elli Davis, a sales representative at Royal LePage.

Soper referenced a demographic shift that is currently happening within the housing market, as retirees are looking to downsize their homes. “Appreciation in the luxury condominium market is outpacing the traditional target for large value residential property investment, the detached house,” Soper states. “Baby Boomers are finally exiting their large family homes, and luxury condos, with their low maintenance lifestyles, are the favoured destination.”  He also explains a shift in attitudes when comparing housing types. Home buyers used to look at condos as an “entry-level form of housing,” and therefore targeting single detached homes as a form of luxury living.  Now there is a shift, as millennials are moving out of their parent’s place and into a condo of their own, and parents are following suit. The big residential home these Baby Boomers once had, are simply not serving the needs it once did. Soper recaps that Baby Boomers are looking to move somewhere with less maintenance, more amenities, and in close proximity to vital spots “more walking, less driving…that sort of thing.”