Consumer appetite for premium real estate in Canada has helped drive a boom period in the luxury homes space, as mortgage interest rates remain low and demand from international consumers boosts broader demand for these properties, as well as driving a parallel increase in home values.
Recent statistics from Sotheby’s International Realty Canada revealed that sales of homes priced at C$1 million ($936,680 USD) and above had increased by about 32 percent in the first half of 2014, as compared to the first half of 2013. Sotheby’s analytic report covered luxury homes in Vancouver, Montreal, Calgary, and Toronto, and added that luxury home prices in Toronto and Vancouver enjoyed the highest year-over-year increase, with values appreciating by 34 percent.
“These are historically low interest rates and people are confident that they can afford borrowing with the equity in their homes,” posited Sotheby’s International Realty Canada Chief Executive Ross McCredie in an interview with Yahoo! Finance. “People are realizing that a big chunk of their net worth is in real estate and they’re renovating to increase that. You also have a lot of wealthy international buyers. Canada’s seen as a stable and safe place to invest.”
Demand for premium residential properties has experienced a significant increase, as consumers are jumping off the fence and taking advantage of rock-bottom interest rates, which have been at about 4.8 percent since May. As for foreign demand for luxury properties in Canada, the Sotheby’s analytic report postulated that this demand should remain healthy in the country’s largest cities, as the end of the immigrant investor initiative this February did not create a noticeable dent in sales.
Said program was in place to help foreigners immigrate to Canada should they have a net worth of at least C$1.6 million and be willing to invest at least C$800,000 in moving to the country.