With significant year-over-year gains in luxury home sales, volume and prices, Victoria, BC has been named the “hottest” luxury housing market in the world.
Similar to growth experienced in Toronto and Vancouver in recent years, Victoria saw rapid increases in housing prices and sales in 2017. And, according to Christie’s International Real Estate Luxury Defined 2018 report, published this week, that growth was enough to make the city the most in demand prime property market worldwide.
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By the end of 2017, the average price of a luxury home in Victoria was $1.2 million. Last year, the highest priced home sold in the city was for $9 million.
“We’ve definitely seen an increase [in sales], we’ve seen an influx of traffic coming here,” Victoria realtor Todd Mahovlich tells BuzzBuzzNews.
The global luxury real estate organization classifies luxury homes as properties valued at $1 million-plus USD.
Christie’s determined Victoria’s top rank using its Luxury Thermometer, which evaluates growth and demand by analyzing a market’s annual changes in days on market and sales volumes.
The organization says sales volumes are the most reliable predictor of a housing market’s future health and price gains, with the exception of any changes in market fundamentals.
According to Mahovlich, over the past year, luxury home sales in Victoria were driven by interprovincial migration.
“That seems to be really what’s spiking the market. There are Asian buyers as well, but they don’t make up as much of the market as the Ontario, Alberta and Vancouver buyers,” he says.
As for activity in Victoria’s luxury market in 2018, new federal and provincial regulations could be potential headwinds for the city.
On January 1, the Office of the Superintendent of Financial Institutions (OSFI) implemented a new stress test for uninsured mortgages. Although the stricter regulations have cooled residential sales activity across Canada, Mahovlich says the test won’t have a significant impact on the luxury market, as many of these buyers have plenty of equity.
In addition to the stress test, the BC government announced new housing policies in February to address the province’s housing affordability crisis.
The new rules include raising the foreign buyers tax to 20 per cent, along with a new speculation tax, which Mahovlich says is already having an impact on the market.
“It’s already affecting things…People don’t necessarily want to be paying a premium and then getting taxed on top of that just for the opportunity to own real estate,” he says.
However, going forward Mahovlich expects that activity will pick up in the luxury market this year once the new rules are established and understood.
“I think once these rules are actually rolled out and everybody knows what they’re dealing with, that’s going to make a big difference,” he says.