Low interest rates and unprecedented household savings drove Canada’s luxury housing market during the first half of the year, and while demand has let up a bit, it will remain robust through the rest of 2021, says a new report from Engel & Völkers.

“After an unprecedented run, premium real estate markets are normalizing across Canada’s most in-demand cities, and that’s a good thing. At a global level, Canada’s real estate market is largely undervalued. But with low housing inventory and the buyer frenzy we saw in the first half of the year, Engel & Völkers believes the unprecedented demand for luxury properties will sustain. Local demand for luxury housing increased exponentially during the pandemic and international buyers are excited to return after a year of border closures. 2022 will be a year to watch,” said Anthony Hitt, president and CEO of Engel & Völkers Americas.

Montreal and Vancouver are expected to remain top destinations for international purchasers of luxury real estate, however, because Canada’s housing supply is constricted it will create tighter market conditions, says the report.

Montreal is doubtless investors’ favourite luxury market in Canada. The city attracts purchasers from French-speaking parts of the world and its robust employment opportunities and reputed educational institutions, not to mention its relaxed pace of life that’s evocative of Europe, have turned the city into a global destination. Home prices and production increased during H1-2021, with sales over $1 million rising surging by 115% in January to 131 from 61 during the same month last year. Sales of plexes in the city rose by 74% through the first four months of 2021 compared to the same period in 2020, while $1 million-plus condo sales increased to 138. Properties in Montreal are still favourably priced for investors, and Engel & Völkers noted that they’re creating funds to buy luxury detached homes in Westmount and Outremont, two of Montreal’s most prestigious neighbourhoods.

Vancouver, fresh out of the third wave of the COVID-19 pandemic, has a promising luxury market, says the report. Recreational properties, especially with resort-style amenities, outside of the city are in high demand among city dwellers. The city’s luxury condo market has also been strong all year, with buyers demonstrating preference for things like square footage, amenities and parking, irrespective of price. Engel & Völkers says the city remains a seller’s market, although it’s slated to balance in autumn. Vancouver is also anticipating an influx of new residents from around Canada and internationally, some of whom will begin driving ultra-luxury home sales in the city.