The State of Canadian Luxury Real Estate: A 2025 Overview

As we step into 2025, the landscape of the Canadian luxury real estate market is evolving, revealing both opportunities and challenges. A recent report by RE/MAX Canada highlights that 75% of luxury markets have reported increased year-over-year sales in the early months of the year, underscoring a resilient market despite looming economic uncertainty.

Key Findings from the 2025 Spotlight on Luxury Report

The 2025 Spotlight on Luxury Report meticulously examined trends across 12 major Canadian housing markets. It reported that while sales in smaller markets surged due to lower price thresholds, larger cities experienced stagnation and even declines. Notably, areas such as Saskatoon showed an astonishing 100% increase in luxury sales, while renowned markets, including Hamilton and Greater Vancouver, faced declines of 41.2% and 12.8%, respectively.

Doubling Up in Smaller Markets

Saskatoon’s 100% increase is a standout example in the report, alongside the Island of Montreal (+78.6%) and Edmonton (+69.7%). Conversely, markets like Hamilton saw stark reductions, leading analysts to explore reasons for this emerging dichotomy. Small to mid-range luxury properties appear to have fared better as buyers seek affordability in uncertain times.

This trend highlights consumers’ shifting preferences, as well as factors such as increased stock market volatility and demographic changes, which are guiding potential buyers’ decisions.

The Political and Economic Climate

Political factors cannot be overlooked. Increased tensions between Canada and the U.S. and the potential for tariffs on goods have created a cloud of uncertainty. Though many Canadians began the year optimistic—driven by strong stock market performance and favorable lending conditions—demand has been stifled due to fears of economic repercussions.

Kingsley Ma, Area Vice President at RE/MAX Canada, elaborates on this sentiment, noting how rapidly changing political climates can cause potential buyers to hesitate in their purchasing decisions.

Downmarket Resilience in Luxury Segments

Despite overall slumps in the higher price brackets, there’s noteworthy resilience within the downtown Toronto luxury market. Listings above $7.5 million showed significant activity, with seven sales, including four over $10 million. This suggests that while general consumer behavior leans towards caution, the ultra-rich segment may remain confident and active.

Factors Driving Demand

Several factors are fueling demand in the luxury sector, including:

1. Population Growth: Significant influxes of new residents into cities like Calgary and Edmonton are stimulating demand, as are demographics shifting towards multi-generational living arrangements.

2. Government Initiatives: Recent federal changes, including increasing the cap on CMHC-insured mortgages, have bolstered activity at higher price points, particularly in markets like Edmonton and Saskatoon.

3. Equity Gains: Many prospective buyers are leveraging equity gains from existing properties to facilitate their moves, particularly as traditional downsizing trends evolve into lateral moves without sacrificing price points.

Trends to Watch

As the year unfolds, several key trends are expected to emerge:

• Downsizing Redefined: The aging luxury demographic is increasingly downsizing but doing so in a savvy manner—shifting to smaller properties that still offer comparable amenities.

• Multi-Generational Living: The uptick in multi-generational households is becoming common in high-end markets, with buyers seeking properties adaptable to various family needs.

• New Construction: Certain Canadian cities are seeing robust infill and new housing construction, despite fears surrounding potential tariffs affecting material costs.

A Glimpse into Major Markets

• Greater Vancouver: Despite early signs of robustness, the luxury market has faced a decline. Older luxury homes are in demand, but the uptick in vacancy taxes has driven some buyers to more distant markets for better value.

• Calgary: The city continues to attract buyers, particularly from Ontario and British Columbia. Sales in Calgary’s luxury segment are trending positively, with significant population growth contributing to local demand.

• Ottawa and Montreal: Ottawa reports a spike in sales, with an increased demand for luxury detached homes. In Montreal, the luxury market is buoyed by newcomers and a supply of lower interest rates, driving up sales significantly.

Final Thoughts

The 2025 Outlook for Canadian luxury real estate reveals that despite potential challenges posed by economic uncertainty and market fluctuations, there’s a thread of optimism stitching together the fabric of this sector. While sales in larger markets may currently struggle, smaller markets thrive amidst shifting consumer preferences.

As RE/MAX Canada notes, the anticipation is for a stabilization of trade and political climates to boost buyer confidence as 2025 progresses. Given Canada’s stable fundamentals and increasing millionaires, many expect the luxury real estate segment to enjoy enduring health in the long term.

It will certainly be an intriguing year ahead as stakeholders navigate the complex interplay of market trends, political dynamics, and economic conditions shaping luxury homebuying in Canada.