Potential Buyers, Sellers of Luxury Vancouver Real Estate on the Edge: Report

Rising interest rates, inflationary pressure and widespread economic uncertainty are cooling Vancouver’s luxury real estate market, according to a new report.

Sotheby’s International Realty Canada has found that high-end buyers and sellers are choosing to stay away in major cities across the country, causing demand and supply to dry up.

“Canada’s conventional and luxury real estate markets are experiencing a long overdue transition after an era of over-exuberance during the pandemic, particularly in regions that have seen the strongest acceleration over the past two years,” said Don Kottick, President and CEO, in a press release summarizing the report’s findings.

“The market is still absorbing the effects of rapid increases in interest rates, as well as changes in the domestic and global economic landscape, and real estate sellers and buyers are taking a step back to strategize.”

In Vancouver, sales of residential properties listed at more than $4 million were down 51% year-over-year in July and August, and down 58% in September. The report, however, called last year’s activity “unsustainable”, “frenzied” and “unusually exuberant”, and described the decline as an indication that this segment of the market is normalizing.

According to the report, the city remains one where the housing market is plagued by “affordability challenges,” which have been exacerbated as the cost of living continues to climb. However, even those looking to buy or sell multi-million dollar properties are being deterred by rising interest rates and inflation.

“Despite the greater financial resilience of luxury and ultra-luxury buyers and investors to absorb the impact of rising interest rates and inflationary pressures, many have temporarily positioned themselves on the sidelines in anticipation of future price declines. price,” it read.

“At the same time, the reluctance of many sellers to list and sell properties at prices appropriate to new market realities has resulted in what is widely seen as a temporary period in which price and market stickiness activity will prevail as buyers and sellers adjust to the new norms.”

The full report is available online.

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