“Affluent buyers appear to have acclimatized to Toronto’s higher land transfer tax structure, which went into effect on January 1, 2024. The initial shock of the tax hike has likely subsided, and purchasers are simply treating it as the cost of doing business. That said, nearly half of the high-end sales over $5 million reported by TRREB occurred on the outskirts of the city. Last year, sales in the 905 represented just 36 per cent of luxury homebuying activity.” While ideal market conditions – including pent-up demand, softer housing values and increased inventory levels – existed through much of 2024, the 100-basis-point drop in the overnight rate was the primary catalyst beyond stronger buyer enthusiasm. Secondary drivers such as growing consumer confidence levels, coupled with near-record highs in the stock market in 2024 also played a role, given that the NASDAQ closed the year up 30 per cent; S&P 500 was up 24 per cent; the Dow Jones was up 13 per cent; while closer to home, the S&P/TSX composite index rose 18 per cent. Along with the strong performance of financial markets, the easing of inflationary pressures was another factor that contributed to the rising fortunes of wealthy investors. “Profit-taking was widespread at year end, with many stakeholders converting paper wealth to material wealth,” explains Alexander, noting the scenario was playing out south of the border as well. Luxury real estate has bounced back in top tier U.S. markets including Miami, New York, Los Angeles and San Francisco in the final quarter of 2024.
“The uptick in home-buying activity sets the stage for a strong luxury market in 2025,” says Alexander. “After several years of softer sales at higher price points, affluent buyers have the confidence to move forward once again. Supply has been a considerable factor hampering strong buyer intentions and we expect that to continue. While we do expect to see more listings come on stream, they’re being offset by the increase in buyers moving off the sidelines.”
SUPPLY IMPACTING VALUE AT UPPER PRICE POINTS
While market conditions varied by neighbourhood in the fourth quarter, pockets with the tightest supply saw values hold steady, while those with greater selection experienced a five- to 10-per-cent decline, especially at the $5 million to $7.5 million price point. To illustrate, the average price of the 84 homes sold over $5 million hovered at $7.56 million in the fourth quarter of 2024, down almost seven per cent from the $8.1-million average price tag on sales during Q4 of 2023. Toronto’s Rosedale-Moore Park area experienced the strongest activity, with 13 sales in Q4, followed by Forest Hill South (7), Bridle Path-Sunnybrook-York Mills (5), and St. Andrews-Winfields (5). In suburban markets, Oakville (8) led the 905 in terms of sales over $5 million, followed by Richmond Hill (6), Vaughan (4), King (4) and Milton (4).
On a year-over-year basis, the fourth quarter swell pushed overall luxury home-buying activity ahead of 2023 levels. Sales over the $3-million price point were up almost four per cent in 2024, with 1,514 sales occurring throughout the Greater Toronto Area, up from 1,456 one year earlier. A 21-per-cent increase was realized in luxury sales over $5 million, with 298 sales reported in 2024, compared to 246 in 2023. Sales over $7.5 million climbed 18 per cent, with 72 properties changing hands in 2024, compared to 61 in 2023. Sales over $10 million were up 17.4 per cent, with 27 homes sold in 2024, compared to 23 sales one year earlier. Q4 sales represented 24 per cent of overall luxury homes sales in 2024, compared to 17.7 per cent in 2023. Single-detached luxury homes remained in high demand, while condominiums experienced a turbulent 2024 across all price points, with a serious influx of inventory evident in the city’s downtown core. However, luxury homebuyers are slowly re-entering the top end of the market, with recovery expected to result in a turnaround by year-end 2025 and in early 2026, as aging sellers make lateral moves to luxury condos. The primary reasons behind the move to condos in the GTA this year is opportunity, followed by safety and security. Some luxury condo developments are attracting interest—a sign of the changing tide. For example, a new luxury condo project in the Bridle Path with large units is selling well in pre-sales. While domestic buyers have been most active in the market this year, there has been a resurgence in luxury home-buying activity among young, landed Chinese immigrants, many of whom seek assistance from their parents abroad. China continues to grow in affluence, with significant purchasing power in all categories of luxury goods globally and real estate remains no exception, despite stricter policies on foreign ownership in several countries. The transfer of wealth from baby boomers will also continue to empower Gen X, Millennials and some Gen Z buyers, with billions of dollars poised to change hands in Canada over the next decade. In many cases, this is happening sooner in life in the form of an early inheritance gifted by living relatives. Statistics Canada reports that nearly one-third of all first-time buyers in Canada cover their down payment—in whole or in part—by money from parents or relatives. Wealth transfer is propping up home-buying activity across all segments, including the luxe and uber-luxe segment. In the World’s Wealthiest Cities Report released in mid-2024 by London-based Henley & Partners, Toronto was ranked 13th in the world for the number of high-net-worth individuals. Despite an expected slowdown in population growth, overall demand for properties in Toronto is expected to remain solid, especially for single-detached homes, particularly as that category comprises a smaller percentage of overall sales in the years to come and as price growth and limited supply push more detached homes in luxe price points.
