Canada’s ultra-luxury market is unaffected by climbing interest rates
Canada’s ultra-luxury market is unaffected by climbing interest rates

Canada’s ultra-luxury market is unaffected by climbing interest rates

Canada’s ultra-luxury market is unaffected by climbing interest rates: It seems like the ultra-luxury real estate segment is not impacted or affected by the sky-high interest rates. 1% of Canada is still buying real estate. The country’s priciest cities are no exception. In Canada, the ultra-luxury markets aren’t feeling the impacts of perpetually climbing interest rates.

The luxury market has followed suit with a slight price drop in Toronto. From the peak in Feb, the residential class properties priced between $1M and $3.99M saw a 12% price drop. The price for condos in the $1M to $3.99M bracket peaked later.

Toronto’s ultra-luxury space is a different story. Residential class properties saw an annual high of $6,199,350 in July, since Jan 2022 which is a 9% increase. Monika Schnarre, an Engel & Völkers real estate advisor said that the ultra-luxury market hasn’t seen the same impact as the regular residential market.

The stock market is still relatively high. The educated investor over the age of 40 remembers that these things are cyclical, like in 1994 and 2008. Buyers who can afford a home over $4M are less susceptible to high-interest rates. The buyers are all looking at properties that are over $4M.

Despite interest rate hikes impacting the $1M – $3.99M segment and the middle market, ultra-luxury homebuyers over the $4M price point are not seeing much impact according to Amy Leong, an advisor at Engel & Völkers Vancouver.

To purchase properties buyers in the ultra-luxury segment previously took advantage of historically low-interest rates. Homebuyers under $4M market take out a mortgage. 

From Feb, the average sold price for all property types in this range decreased by 6%. If we talk about condos priced over $4M, the average sold price peaked at $6,640, 360 in June. According to Ballam, those ready to purchase are in a rare position to negotiate. A number

of buyers are sitting on the sidelines to see where the market will land. 

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