The luxury residential market has experienced a relative weakening over the past year, according to a January report by Sotheby’s International Realty Canada.

This lethargy was especially apparent in the highly active Toronto and Vancouver markets. In 2018, transactions involving homes worth $1 million and above declined by 31% year-over-year in Toronto, and by 26% in Vancouver.

Meanwhile, sales of properties valued at $4 million and above shrunk by 40% annually in Toronto last year. During the same time frame, activity in this price range fell by a more pronounced 49% in Vancouver.

As far back as mid-2018, potential weaknesses in these markets were already observable.

“The collision of rising mortgage rates, stricter lending guidelines and cascading governmental policies and taxes have impacted the performance of several top-tier Canadian markets,” Sotheby’s International Realty Canada president and CEO Brad Henderson warned in July.

Other major contributors were supply scarcity and lower purchasing power due to the economic impact of weaker oil prices – a factor especially influential in Calgary, the Sotheby’s report stated.

Calgary’s luxury sales decreased by 10% year-over-year in the $1 million and above price bracket in 2018. Only one home valued at more than $4 million was sold in the city last year.

The Luxury Market’s Legs Have Weakened Somewhat by Ephraim Vecina | Canadian Real Estate Wealth