The Canada Mortgage and Housing Corporation (CMHC) recently reported that Ottawa’s “population-adjusted construction is at its lowest level in nearly 10 years.” A City of Ottawa progress report shows that Ottawa is only at 22 per cent of its annual housing target at the end of August.  

The Ottawa Real Estate Board (OREB) reported a healthy increase in home sales for September, with 1,047 units — a rise of 11.4 per cent from the same time in 2023. However, sales remain below historical averages, coming in 17.4 per cent below the five-year average and 15.4 per cent below the 10-year average for September.

Year-to-date, home sales reached 10,485 units, representing a 6.4 per cent increase compared to September 2023.

Healthy fall outlook with chronic supply issue — ‘not building enough of the right homes to address the ‘missing middle’’

“As we navigate a shifting housing market, Ottawa’s fall outlook is healthy,” says OREB president Curtis Fillier. “Activity is robust with an uptick in sales and prices remaining steady. Meanwhile, both buyers and sellers are rethinking their purchasing power amid news about additional interest rate cuts on the horizon, longer amortizations and increased price caps for insured mortgages.”

Fillier goes on to explain that recent policy developments to stimulate demand have been encouraging, though the Ottawa market doesn’t typically experience issues with demand. Rather, “We have chronic supply issues,” he notes. “We’re not building enough homes in the city, and we’re not building enough of the right homes to address the ‘missing middle.’”  

Price trends

The overall MLS Home Price Index (HPI) composite benchmark price for September was $642,800, a slight increase of 0.2 per cent from September 2023.

Single-family homes saw a benchmark price of $729,000, up 0.5 per cent year-over-year, townhouses/row units experienced a 1.7 per cent decline with a benchmark price of $500,000 and apartments had a benchmark price of $414,200, down 1.3 per cent year-over-year.

Inventory and new listings

September’s new listings totalled 2,343 units, a 3.9 per cent increase from the year prior. This was 4.7 per cent above the five-year average and 11.6 per cent higher than the 10-year average.

Active listings rose to 3,529 units, marking a 16.9 per cent year-over-year increase and sitting 43.3 per cent above the five-year average. Months of inventory rose slightly to 3.4 months, up from 3.2 months in September 2023, indicating a slightly more balanced market.

Review the full report here.

Saskatchewan recorded 1,398 home sales in September, marking an 8.0 per cent increase from last year and 15 per cent above the 10-year average, the Saskatchewan Realtors Association (SRA) reports. This is the 15th consecutive month of above-average sales in the province, with some of the strongest figures ever reported for September.

“Record population growth, favourable economic conditions and an improving labour market continue to support strong demand in Saskatchewan’s housing market,” says SRA CEO, Chris Guérette. “When paired with easing lending rates, these factors are, without question, contributing to a fifteenth consecutive month of above-average sales.”

Sales & inventory highlights

Detached homes accounted for 73 per cent of the sales growth, with regions across the province seeing improvements and year-to-date sales on track to be the second-highest on record.

New listings dropped 2.0 per cent year-over-year, falling 16 per cent below long-term trends. This, combined with strong sales, led to a 17 per cent inventory decline, pushing levels to their lowest since 2007.

Price highlights

The provincial benchmark price in September was $343,800, down slightly from August but up nearly 6.0 per cent from last year.

Moose Jaw led the province’s price gains with a 13 per cent increase, while Saskatoon reported a record benchmark price of $401,800, up 7.0 per cent year-over-year.

Regina highlights

Regina reported 320 sales last month — the second-highest level on record and a 5.0 per cent year-over-year and 19 per cent long-term trend increase.

The city’s new listings were down, creating a 23 per cent inventory dip year-over-year. Its benchmark price was $320,700 in September, nearly five per cent above the year prior. 

Saskatoon highlights

Saskatoon reported 432 sales last month — a 16 per cent year-over-year and 24 per cent long-term trend increase.

The city’s supply is still limited and prevented strong sales, with September’s inventory levels at over 46 per cent below the 10-year average and the lowest reported for the month since 2007.

Review the full report, including by province, city, CMA/CA, economic region and census division.

Unprecedented population growth is dramatically changing Canada’s conventional and luxury real estate market, according to Sotheby’s International Realty Canada’s Top-Tier Real Estate: 2024 Mid-Year State of Luxury Report.

Statistics Canada data reveals that all major Census Metropolitan Areas (CMAs) experienced their fastest growth since 2001-2002 in the year ending July 1, 2023. Calgary led with a 5.9 per cent growth rate, followed by Edmonton and Vancouver at 4.1 per cent, Toronto at 3.3 per cent and Montreal at 2.9 per cent.

Interprovincial & interregional migration: Key indicators of local economic confidence & consumer sentiment

Experts from Sotheby’s note that interprovincial and interregional migration trends are key indicators of local economic confidence and consumer sentiment, influencing both conventional and luxury housing markets.

The Vancouver CMA experienced its largest net loss to interprovincial migration in over 20 years, losing 4,795 people, and all Ontario CMAs, including Toronto, saw net losses in interprovincial migration. Alberta surpassed British Columbia in net interprovincial migration gains, with Calgary leading the CMAs, gaining 26,662 people. Toronto, Montreal and Vancouver continued to see significant net losses to regional migration.

Performance by city

Toronto’s luxury real estate market, supported by a population gain of 221,588 people, beat economic challenges to maintain steady activity in the first half of 2024. Despite higher interest rates, economic uncertainty and housing taxes and regulations, the GTA saw a modest 8.0 per cent year-over-year increase in residential real estate sales of over $4 million. However, sales over $1 million fell by 10 per cent. Within the City of Toronto, $4 million-plus sales rose by 4.0 per cent, but sales over $1 million dropped by 7 per cent.

Calgary’s real estate market reached new heights in the first half of 2024, driven by immigration and record inter-provincial migration. With a 6 per cent population surge and an influx of 95,784 people, competition for limited listings intensified, resulting in a 46 per cent year-over-year increase in high-end residential sales of over $1 million. Sales of homes over $4 million saw a 75 per cent annual gain.

Montreal’s luxury market remained balanced in the first half of 2024, with $4 million-plus residential sales up 29 per cent and $1 million-plus sales rising 25 per cent year-over-year. Homebuyers and investors took their time navigating the market, extending home searches and negotiations.

In contrast, Vancouver’s luxury market activity dropped. From January to June, luxury residential sales over $4 million fell by 16 per cent, and sales of ultra-luxury properties over $10 million dropped by 50 per cent. Despite a 27 per cent gain in $4 million-plus condominium sales, demand for luxury condominiums remained soft. The net loss of 18,399 people from the Vancouver CMA to other regions of B.C. dampened demand for housing.

Migration from larger to smaller communities foreshadows trends in sales, prices & market performance

“While record-setting population gains in Canada’s largest metropolitan areas continue to be powerful influences on the local real estate market, interprovincial and interregional migration patterns are now leading signals for local economic sentiment, core housing demand and conventional and luxury real estate market performance overall,” says Don Kottick, president and CEO, Sotheby’s International Realty Canada.

“The migration of residents and their talent and financial capital away from cities like Toronto and Vancouver to communities in surrounding regions or to provinces such as Alberta foreshadow trends in sales activity, housing prices and real estate market performance. This applies to the cities they are leaving and the markets they are moving to, and it applies across the conventional and luxury markets.”

Kottick notes that elevated prices and interest rates continue to impact consumer decisions, leading to steady but subdued activity in most major metropolitan luxury real estate markets. However, Alberta’s major cities are outperforming due to record-setting population gains, increasing both conventional and luxury sales to new levels during the first half of the year.

Review the full report here.

More Torontonians are fleeing the hustle and bustle of the city for the quieter, sports-filled lifestyle of The Blue Mountains and Collingwood, area realtors say.

“A lot of families are moving here just for a better quality of life for their kids because there’s more space, it’s a lot safer, they can walk home from school and there are lots of programs,” explains Eva Landreth of Century 21 Millennium. Landreth says 90 per cent of her clients are from the GTA and are either active retirees, families or people seeking a secondary home.

Many can work remotely or go into Toronto one or two days a week “and just suck up the drive so that they can be home.”

Recent population boom makes it a ‘very welcoming place’

According to 2021 Census data from Statistics Canada, The Blue Mountains had the second-highest population growth in Canada between 2016 and 2021, growing more than 33 per cent from 7,025 in 2016 to 9,390 in 2021. 

For its part, Collingwood saw an impressive 13.8 per cent population increase from 21,793 to 24,811 during that period.

Many of the people in the region are newcomers, says Landreth, who moved to the area nine years ago after several years in the Cayman Islands. “Everyone you bump into has just recently moved here within the last five years, so it’s a very welcoming place.” 

Sarah Swackhammer, another realtor with Century 21 Millennium, moved to The Blue Mountains town of Thornbury from Burlington, Ont. in the GTA eight years ago.

“We were coming up on the weekends and decided we didn’t want to leave,” says Swackhammer, who has worked in real estate in the area for three years after a 20-year career in mental health. “We wanted to stay here. We’re both really active and we had younger children.”

When Swackhammer first moved to the area, few people were coming from the GTA but now many are moving from the metropolis 175 kilometres away, seeking quieter lifestyles.

Landreth says many GTA residents lived in their secondary ski chalets during the pandemic but are now selling and moving into bigger, permanent residences. She also has a company called Seasonal Properties that helps homeowners rent out their homes during ski season or other popular periods.

Increased pandemic prices now stabilized to GTA ranges

Housing prices, Landreth says, increased 20 to 30 per cent during COVID but have now stabilized. Still, prices are now like those in the GTA. “To get a beautiful house with a pool in The Blue Mountains is close to $1.9, $2 million,” she notes.

The median list price for homes in The Blue Mountains was $1.128 million in May, up about two per cent over the median price of $1.103 million in April, according to Houseful.ca. 

Swackhammer says houses in the area saw a correction of as much as 30 per cent from the beginning of 2023 to 2024, but she believes it’s levelled out now. “We’re seeing more of a balanced market. Things are still selling but there’s just more inventory.” 

She recently sold a two-storey home in Collingwood that sold in two days for more than its $1.1 million list price, after it received multiple offers. “That typically doesn’t happen, but when you price something well, it’s desirable — the lot was 66 (feet) by 180 or so; it was a good-sized lot.” 

‘Having what I would want in the GTA wouldn’t be possible’

Jess Annand is one of the newcomers to the area. She built her three-storey home in The Blue Mountains four years ago, a year after selling her 900-square-foot condominium on Avenue and St. Clair in Toronto. Annand’s 2,500-square-foot new build cost less than $600,000 — about $300,000 less than her condominium’s selling price. 

“I wanted more space and financially I wasn’t able to have a single-storey home in the GTA,” says Annand, who launched the public relations firm Maeve + Co. last fall.

About 15 of her friends have moved to the area from Toronto, Oakville or Burlington, so Annand decided to take the plunge. “I truly don’t know if I would ever go back. Having what I would want in the GTA wouldn’t be possible,” she says of her new home, a 10-minute walk from Blue Mountains Resort and a 10-minute drive from Georgian Bay.

She notes the area has recently transformed into not just a ski mecca but a four-season community. “We don’t have the accessibility of museums and tons of restaurants and high-end shopping. But it doesn’t really seem to bother anybody.”

An easier way to live without commutes and traffic

Julia Riley and her husband bought their Collingwood house six years ago, “before the market exploded up here. We got in at a great time,” she says.

The former downtown Toronto resident says she loves the lifestyle, from skiing to cycling, and has no interest in returning to the city. She also feels she’s not missing out on anything — it’s not too long a drive to Toronto to take in a Blue Jays game or to visit friends. 

“It’s a tight community and we’ve met a ton of great people up here who have kids around the same age as ours,” says Riley, who has a two-year-old and a four-year-old. “Commuting to work, running all your errands and doing school pickup and dropoff is just so easy up here. You’re not dealing with big commutes and traffic.”

Strong population growth and housing supply issues are driving significant shifts in the Canadian commercial real estate market. Builders and developers are focusing on multi-family purpose-built rentals to address the housing shortage, a trend supported by incentives like the Canada Mortgage and Housing Corporation’s (CMHC) Apartment Loan Program, Re/Max Canada’s 2024 Commercial Real Estate Report notes.

“The overwhelming need for shelter, combined with the CMHC’s Apartment Loan Program that has incentivized builders and developers with low interest rates, favourable terms and 50-year amortization periods, have created the perfect storm in today’s high interest rate environment,” says Re/Max Canada president, Christopher Alexander.

“Unfortunately, with Canada’s population surpassing 40 million people this year, even the current upswing in residential construction continues to fall short of the thousands of units required in most major markets.”

The report highlights this shift, noting that multi-family and industrial real estate are now the top-performing asset classes. It also points out that farmland in Saskatchewan is experiencing high demand, making it one of the strongest-performing asset classes.

Trends of note

There’s a focus on high-density and mixed-use developments due to limited land availability, with many shopping centres incorporating residential components. An increase in the capital gains tax has impacted smaller investors, causing some to delay property sales. Industrial real estate remains in high demand, particularly for warehousing and manufacturing spaces, though affordability is becoming an issue in larger urban centres.

Retail stores, especially those in the health and wellness industries, continue to perform well despite the rise of e-commerce. Luxury retail brands are expanding in major markets like Toronto and Vancouver. The hospitality industry is rebounding, with new hotels opening and existing ones expanding. Real Estate Investment Trusts (REITs) are adjusting their portfolios, leading to the sale of older assets and the purchase of newer properties.

The office sector is struggling with high availability rates, and while conversions to residential use are increasing, they aren’t a complete solution. Adaptive reuse of buildings, including hotels and schools, is becoming more common as municipalities seek creative solutions to the housing crisis.

Western Canada’s commercial real estate market is expected to remain strong, supported by a positive economic outlook. Industrial activity is growing in more affordable markets outside major urban centres. There’s cautious optimism for the latter half of the year, with expected improvements in market conditions as residential housing needs and population growth continue to drive demand across commercial segments.

Looking ahead

“Density, population growth and the housing crisis remain significant factors influencing market activity, but a variety of drivers will have an ongoing impact on the Canadian commercial real estate market moving forward,” says Alexander.

These things include economic performance, interest rates, incentives and development policies, processes and fees, tax policies, construction costs, land costs and servicing, labour shortages, housing affordability and availability, revitalization efforts and hybrid/remote work policies, social issues and more.

Alexander notes that confidence levels are expected to rise, sparking renewed activity in the market, while supply issues are expected to persist for the most sought-after segments as purchasers look to strengthen their investment portfolios with a mix of assets.

“In the longer term, the underpinning of the Canadian commercial real estate market appears positive. Residential housing needs and a swelling population are anticipated to be the root and catalysts of growth in most commercial segments. Inevitably, as communities expand, so too does the need for all types of services, prompting greater business development and increasing requirements of operations and infrastructure. Simply put, growth begets growth, and the ripple effect is already evident.”

While Alexander notes that diverse market dynamics exist, overall improvement is expected to characterize conditions and demand as 2024 progresses.

Review the full report, including market overviews, here.

“We have the most affordable housing in all of Canada, pretty much any city,” Brian Jean, Alberta’s minister of jobs, economy and northern development, said in March 2023. “They can sell their house in Toronto or Vancouver, buy four houses here in Alberta and live in one and rent three.”

Over 100,000 migrated in four years, at least as many more expected by 2027

Many took up the offer. Statistics Canada reported from July 1, 2022 to July 1, 2023, Alberta’s population grew by 4 per cent, with over 55,000 more people moving in than moving out. In four years, Calgary’s Housing and Affordability Task Force believes that number surpassed 100,000, with another 110,000 coming in the next few years.

The negative consequences of such a campaign are being realized as those moving into Alberta are finding their dollar goes farther, while those in Calgary are seeing prices increase.

Migration seen as problematic for long-time Calgary residents waiting to buy

“My clients who have been here for 15, 20 years are trying to get into the market, and the down payment they had is not good enough anymore,” says Anthony Lewis, a Re/Max Real Estate (Central) agent.

A lifelong Calgarian and realtor of over 10 years, he points to the migration as a problem for those who have been living in Calgary and waiting to buy. “People from Ontario and B.C. are coming in, and now it’s too pricey for (my clients) who want a detached home. Now it’s a townhouse or condo apartment.”

More market tenacity from non-Albertans

The province in general and Calgary, in particular, are seeing the same trends as the rest of the country in anticipation of interest rates going down: low inventory and more competition as people ready to enter the market. This leads to more tenacity from some buyers, particularly from outside the province.

“I get a lot of people from Ontario and B.C. offering sight unseen,” says Lewis.”They want to buy an investment property in Calgary, so we have video calls. I’m seeing unconditional offers which may be normal in Ontario, but over here we’re like, ‘get the home inspection.’”

About the Alberta campaign and its marketing efforts to Ontario and British Columbia, Lewis feels it’s “not really doing any favours to home ownership in Calgary.”

Issue seeping into local rental market

It’s not just prospective homeowners who are feeling squeezed; Calgary is seeing their rental crisis exacerbate.

The February 2024 housing report by Rentals.com notes the average Canadian rental price for a one-bedroom unit rose by over 12 per cent. This follows a 19.2 per cent increase from the previous year. Notably, studio apartments, typically the cheapest rental option available, saw their average price rise by over 30 per cent — meaning those seeking out the least expensive option are finding it tougher than ever to secure a place to live.

What’s more, this year CBC reported a dim outlook by the Canadian Mortgage Housing Corporation (CMHC), with vacancy rates set to drop as prices increase and the market tightens. The CMHC January 2024 report noted the average price of a two-bedroom residence in Calgary is $1,695, an increase of 14.3 per cent in one year.

“Where is everyone going to live?” asks Lewis. “People are getting kicked out of their homes.”

More agents, more competition — including from outside Alberta

The influx of residents has increased the number of licensed agents in the province, as well. 

The Real Estate Council of Alberta reports that since January 2021, it received 1,385 mobility applications from real estate agents and mortgage brokers outside Alberta to become licensed in the province. The three-year period previously saw only 399 such applications.

In addition to the rise of licensed agents to deal with the increase in transactions, there’s more competition. So, Lewis and others must face being skipped over entirely.

“Builders here are marketing to people directly in Ontario,” he explains. “I had this problem two years ago, where I was trying to get a presale for this condo, but they weren’t marketing to Calgary real estate agents.”

Increased unaffordability a growing concern: “This is our reality”

While Lewis acknowledges there’s more money to go around for agents, he worries about the increase in people who can’t afford to live there.

“We need to slow down, we need to look at what’s happening,” he says. “It’s out there now that Calgary is a nice city, and that’s what brings everyone here, but I don’t think it can slow down, and I don’t think the government wants it to slow down.”

He does have some advice for fellow agents facing similar dilemmas: “All we can do for the buyers we have that aren’t out of province is paint the picture of how it’s going to be,” says Lewis. “You’re going to be competing against five other people, and three of the five will be from B.C. or Ontario and will go over asking. This is our reality.”

The country’s population saw an average annual growth of 553,568 between 2018 and 2022. In contrast, only an average of 205,762 new homes were constructed each of those years. This has created a 50-year high gap between the two figures, as per the Fraser Institute’s research. Ontario and British Columbia are especially feeling the resulting strain.

On top of this, earlier this month, the federal government announced plans to level out the number of new permanent residents in Canada from 2026 onwards, while still increasing targets as planned for 2024 and 2025. 

When REM asked Andrew Carros of Engel & Völkers Vancouver for his thoughts on the issue, here’s what he had to say.

Q: What do you see as the main challenges for newcomers, as housing inventory is low? 

A: Rental unit scarcity is a major challenge in the market, especially in metropolitan areas where rental rates are disproportionately high, affecting home renters significantly. There’s a shortage of available rental properties, underscoring the need for focused solutions to address this pressing concern. 

Over the past four years, both Ontario and British Columbia have experienced remarkable population growth. In Ontario, the annual increase amounted to approximately 240,000 individuals from 2018 to 2022, as per research by the Fraser Institute released in October this year. Yet, Ontario housing completions averaged only 70,828 per year during this period, highlighting a considerable disparity between population growth and housing development.

A comparable scenario is unfolding in B.C, where the population is growing, yet housing completion lags.

“Effective government intervention is necessary”

Despite having ample space and land, the absence of sufficient housing hampers the ability of Canada to accommodate our growing population. There is a palpable lack of motivation to develop rental properties. To solve the problem, the government must introduce incentives. 

A noteworthy aspect is the recent tax break for developers aimed at incentivizing rental tower construction. However, a limited number of development groups are engaging in these projects due to high land and construction costs, compounded by market affordability challenges. To overcome this, effective government intervention is necessary. Providing affordable land for development and exploring direct land purchase options can encourage more developers to enter the market. 

Additionally, many developers are foreign entities and are currently unable to purchase due to the foreign buyer ban. Allowing them back into the market and incentivizing them to build rentals would further stimulate growth in the rental property market. While tax breaks are positive, a collaborative and comprehensive approach is crucial for sustained real estate development.

Q: Which markets are most impacted and what are some short or long-term solutions?

A: When immigrating, community ties play a pivotal role in shaping residential decisions. Beyond market trends, residents are drawn to areas with shared histories, cultural bonds and communal connections. The robust connections established in these regions directly contribute to an increased demand for rentals, particularly noticeable in cities such as Richmond and Surrey in B.C., and Brampton and Mississauga in Ontario. 

Canadian housing markets continue to transform, with immigration playing a significant role. From a solutions perspective, a strategic focus on building up small towns, coupled with government incentives and a shift in developer priorities, could be the key to addressing the challenges and ensuring a balanced and sustainable housing ecosystem, especially for newcomers.

Canada’s real estate market has been experiencing unprecedented changes in recent years, partly driven by the surging population. The country is now home to 40 million people, after hitting the milestone this year, and the federal government’s plan to welcome an additional 1.5 million immigrants by 2025 has set the stage for a significant demographic shift. 

Historically, population growth has played a role in home prices, as more people require housing. Zoocasa looked closer at the relationship between population growth and home prices and analyzed data from Statistics Canada census records, population estimates, and CREA’s benchmark prices spanning the past 18 years.

The findings reveal a clear correlation between population growth and home prices, though the impact is not always immediate or proportional. As Zoocasa notes, home prices are influenced by a myriad of factors, including economic cycles, government policies, and interest rates, in addition to fluctuations in population. However, the rising demand for homes resulting from population growth contributes to an already limited supply, putting upward pressure on prices.

National home price growth outpacing population

In 14 out of the past 18 years, national home price growth has outpaced population growth by a significant margin, often doubling or even tripling the population growth rate. While population growth has been relatively steady, hovering just above one per cent most years, “national home price growth has been much more volatile.”

One standout year was 2022, during which Canada witnessed a record-breaking influx of immigrants and experienced a staggering 31 per cent increase in the national average home price compared to 2021. However, 2023 took a different turn, with a 5.5 per cent drop in the national home price, despite immigration reaching a new record of 3.9 per cent year-over-year growth, though rising interest rates likely played a significant role in the price decline. 

Long-term outlook: home prices and population growth on the rise

Despite occasional price drops, the long-term trend suggests that home prices and population growth are likely to continue their upward trajectory, particularly in major metropolitan areas like Toronto, Vancouver and Calgary, which attract the majority of newcomers. This is a vital consideration for potential homebuyers, as waiting for a significant downward trend in prices might not be realistic.

Zoocasa’s analysis also highlights that the largest drop in the national average home price in the past 18 years occurred in 2009, during the Financial Crisis, when prices fell by 7.6 per cent. However, prices quickly rebounded, and over the subsequent years, housing affordability worsened due to population growth.

Halifax is becoming one of Canada’s most important real estate markets to watch, according to a new report from Engel & Völkers.

The company’s mid-year 2023 Canadian Luxury Real Estate Market Report shares key findings based on data for homes priced over $1 million in Canada’s most in-demand markets. The report, which combines on-the-ground insights from local realtors with market data, reveals a story of sustained demand in the face of a shrinking pool of properties.

According to the report, Halifax has witnessed a significant rise in the market share of single-family homes priced over $1 million. In the first half of 2023, these luxury homes comprised close to 10 per cent of the market, compared to 4.6 per cent in 2022. 

“Halifax’s population sat at 480,523 as of January, and we are on a trajectory to reach one million people by 2025. Of new residents to Halifax, 74.4 per cent were aged 15 to 44, the largest segment of this age group ever recorded,” says Donna Harding, license partner, Engel & Völkers Nova Scotia. “Many originate from Ontario, Vancouver and Alberta and have built home equity in these markets. This is translating into multiple offers in the $1 to 3.99 million market, as well as across the conventional market.” 

While sales volume is down slightly, the average sold price for homes priced over $1 million grew by 3.2 per cent year-over-year. The report credits the strength in the market to limited inventory and consistent buyer demand.

Montreal, Ottawa, Toronto and Vancouver also seeing growth in the luxury market

“Quality inventory on the market has sold quickly, with homes commanding multiple offers, despite the current climate. Interest rate changes have had negligible effects on premium markets because buyers tend to pay a large portion of home equity upfront. The availability of luxury real estate in Canada continues to shrink…” says Anthony Hitt, president and CEO, Engel & Völkers Americas.

Montreal neighbourhoods, Westmount and Outremont, have seen a notable increase in average home values, with a rise of nearly $1 million over the past decade. 

Ottawa’s luxury housing market has also experienced growth, with the value of homes priced between $1 million and $3.99 million increasing by three per cent from January to June 2023. 

Toronto homes priced between $1 million and $3.99 million have seen a 3.7 per cent increase in average sold prices compared to the beginning of the year. 

In Vancouver’s luxury home market, the price of homes in the $1 million to $3.99 million range has dipped 5.59 per cent from the peak in February 2022, which signals a resilient market, according to Engel & Völkers.

Hitt adds, “Premium markets are proving their resiliency to market fluctuations, showing steady growth and stability. This is in part due to sellers holding off on listing properties while real estate markets return to typical seasonal patterns.” 

Intergenerational transfer of wealth

The report also highlights a growing trend in the Canadian luxury real estate market: the increase of real estate as a generational asset. Similar to European practices, intergenerational wealth transmission through family properties is gaining momentum in Canada. This trend is driven by factors such as limited property availability, unaffordable prices for first-time buyers, and inadequate inventory for downsizing baby boomers.

Baby boomers aid millennials in overcoming affordability challenges

Despite the desire to downsize, baby boomers are finding it increasingly challenging to find appropriate inventory to purchase, such as large condos or single-level bungalows. As a result, many are choosing to remain in their current homes. On the other hand, millennials, who are facing affordability challenges, are receiving financial support from their baby boomer parents. Instead of financing rent, parents are providing their children with significant sums of money for mortgage down payments and monthly payments. According to the report, this growing trend is driven by the belief that real estate is a stable and profitable investment, offering more long-term benefits than the stock market.

Land and labour shortages pose challenges to affordability

However, home affordability remains a persistent issue in major cities. One contributing factor is the shortage of available homes, exacerbated by a lack of buildable land in desirable locations like Montreal, Toronto and Vancouver. A recent study conducted by the Toronto Metropolitan University’s Centre for Urban Research & Land Development reveals a severe shortage of shovel-ready land for ground-related housing in the Greater Golden Horseshoe region. Additionally, the construction industry is grappling with a scarcity of skilled labour and trades, leading to project delays and increased costs for developers.

Foreign buyer ban impacting high-profile athletes and executives

The report also highlights another unintended consequence of Canada’s foreign homebuyer ban: the Prohibition on the Purchase of Residential Property by Non-Canadians Act, is having unintended consequences on high-profile professional athletes and executives. Despite the federal government’s amendments to allow some work permit holders to purchase homes and vacant land, provincial taxes, such as Ontario’s 25 per cent non-resident speculation tax, continue to create barriers for high-net-worth individuals, according to Engel & Völkers. As a result, many professionals are forced to rent instead of buying homes, potentially creating friction for organizations looking to attract top-tier global talent to Canada.

Read the full 2023 Mid-Year Canadian Luxury Real Estate Market Report.

Feature image: 11140 Highway 1, courtesy Engel & Völkers Nova Scotia

The report reveals average rents for all property types in Canada on the Rentals.ca Network have increased by 20 per cent, translating to an average monthly increase of $341.

Rising rents across Canada

In June, average rents experienced a month-over-month rise of 1.4 per cent, marking the highest increase this year. On an annual basis, average rents rose by 7.5 per cent.

The National Rent Report attributes the continuous upward trajectory in average rents to several factors, including the country’s growing population and immigration rates. With Canada’s population now exceeding 40 million, the demand for rental properties is soaring. Additionally, the Bank of Canada’s interest rate hike on Wednesday of 25 points to 5.0 per cent further compounds the challenges faced by potential homebuyers.

Shaun Hildebrand, president of Urbanation, highlighted the correlation between population growth and rising rents, stating, “It’s no coincidence that cities with the fastest population growth are at the top of the list for rent increases.” Hildebrand also emphasized the expected pressure on rents in the near future as the market reaches its peak period and the demand continues to outstrip new supply.

Vancouver retains the top spot

Once again, Vancouver claims the top position as the city with the highest average monthly rent in Canada. In June, the average monthly rent for a one-bedroom home in Vancouver stood at $2,945, while a two-bedroom home averaged $3,863. Compared to the previous year, average monthly rents in Vancouver increased by 18.1 per cent for one-bedroom homes and 14.2 percent for two-bedroom homes. 

Month-over-month, average rents in Vancouver saw a 4.0 per cent rise for one-bedroom homes and a 5.4 percent increase for two-bedroom homes.

Toronto drops to third place

Toronto, historically known for its high rental prices, finished third on the list of 35 cities for average monthly rent in June. A one-bedroom home in Toronto had an average monthly rent of $2,572, while a two-bedroom home averaged $3,301. This is the first time Toronto has not been either number one or two on National Rent Report. Burnaby, B.C., surpassing Toronto, finished second in average rents for both one-bedroom and two-bedroom homes.

Year-over-year, Toronto experienced a 14.1 per cent increase in average monthly rent for one-bedroom homes and an 8.8 per cent increase for two-bedroom homes.

Rents in Canada’s largest markets

In June, Calgary’s average rents for purpose-built and condominium apartments exceeded $2,000 for the first time, reaching $2,008 and reflecting an 18.4 per cent increase compared to the previous year. 

Calgary has now surpassed Montreal, becoming the fourth most expensive city for renters among Canada’s major cities. Vancouver and Toronto continue to hold the title of the country’s most expensive rental markets, with average asking rents of $3,301 and $2,813, respectively, and annual rent increases of 15.4 per cent and 15.7 per cent in June. 

Ottawa, the third most expensive of Canada’s largest markets with an average rent of $2,146 in June, saw similar annual rent growth of 15.3 per cent for purpose-built and condominium apartments. Montreal’s average rent for such properties rose by 11.2 per cent annually, amounting to $1,931 in June.

Midsize markets in the GTA see sharp rent increases

Oakville, a suburb in the Greater Toronto Area (GTA), maintained its position as the most expensive midsize market for renters, with an average rent of $3,230 for purpose-built and condominium apartments. 

Among the 25 mid-sized markets in Canada, nine GTA cities and areas experienced the highest year-over-year rent increases in June for these property types. Scarborough saw average annual rents rise by 27.8 per cent to $2,511, followed by Brampton at 25.8 per cent ($2,620), North York at 21.4 per cent ($2,612), Markham at 20.6 per cent ($2,669), Richmond Hill at 18.4 per cent ($2,679), Mississauga at 17.1 per cent ($2,646), Vaughan at 15 per cent ($2,537), Burlington at 14.7 per cent ($2,561), and Etobicoke at 14.2 per cent ($2,630).

Increasing costs for roommate accommodations

The report also revealed a steady rise in rent prices for roommate accommodations in British Columbia and Quebec, which experienced a 21 per cent increase year over year, reaching $1,157 and $980, respectively, in June. Ontario witnessed an average roommate rent of $996, while Alberta averaged $808. Among the cities, Vancouver had the highest average roommate rent of $1,454, followed by Toronto at $1,288, Ottawa at $947, and Montreal at $927.