Sales in Vancouver’s luxury home market fell in the first four months of 2018, and this trend will continue throughout the year as the market adjusts to the new federal mortgage stress test and other policy changes implemented by the federal and provincial governments, according to a new forecast from Royal LePage.
This comes on the heels of a Knight Frank study earlier this week that found that Vancouver's luxury real estate market was North America's worst performer among 41 global cities in terms of price growth during the past year. Overall, Vancouver ranked No. 31 among those cities.
Luxury detached home sales fell 38.2% in 2018’s first quarter, according to Royal LePage, and luxury condo sales fell 26.5% compared with the same period last year. Prices continued to increase, however: 5% for detached homes and 7% for condos.
Looking toward spring 2019, Royal LePage said it anticipates the median price of a luxury detached home will fall 3% to just over $5.6 million. For luxury condos, it is a different story, however, as prices in this segment are expected to increase 2% to almost $2.6 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,” said Royal LePage president and CEO Phil Soper.
“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.”
Changes in policy at home are not the only factors influencing the market, said Royal LePage Sussex sales rep Brock Smeaton.
“The region has seen less interest from foreign buyers since China tightened its policies on wealth leaving the country.”
The long-term outlook remains positive, however, according to Smeaton.
“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,” he said.
“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.”
Here is Knight Frank's ranking of 41 global cities for luxury home prices during the past year: