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