Canada's growing band of millionaires and an influx of foreign investment are driving a boom in the luxury property sector with six out of eight major centres likely to report new records by the end of the year, according to RE/MAX.
Leading the pack was the greater Vancouver area, where sales of luxury properties priced at $2 million and above more than doubled in the first four months, compared with the same period last year.
Vancouver benefited most from a flood of foreign investment, in particular from China, RE/MAX said. Though some other centres also got a boost from foreign cash, most of the demand came from increasingly wealthy Canadians, it said.
Sales in Ottawa were up almost 60%, Calgary 51%, Winnipeg 24% and Greater Toronto 9%, it said.
The Organization for Economic Co-operation and Development (OECD) predicts Canada will lead the G7 this year in terms of economic growth. Relative fiscal health and low interest rates are likely to be a significant factor in attracting foreign investment.
Yet it's the growing wealth of Canadians that's fuelling the luxury demand.
Deloitte recently predicted that the number of millionaire families in Canada will surge 38% by 2020, with their net worth set to double.
Queen's University Professor John Andrew, who is director of the university's executive seminars on corporate and investment real estate, said even if a luxury bubble were forming, a subsequent burst would not be likely to harm the broader market.
"It's a bit of a quirky market," he said. "It's not a concern as it's quite a small sector and those who play in it are isolated from many normal market forces," said Andrew.
RE/MAX said the appetite for real estate holdings by the super rich has risen and that is also bolstering the high-end real-estate market.
The one limiting factor is the lack of supply. Bidding wars are occurring in both Vancouver and Toronto as buyers compete for a limited number of luxury properties in prime locations.
That said, Ash added the buying frenzy has shown signs of returning to a more normal pace within the past three weeks.
The RE/MAX survey also shows the high end of the market further pulling away from the rest of the residential housing sector.
Figures for April, released by the Canadian Real Estate Association, showed overall sales softened in the month.
