Luxury home sales surge to new record

Metro Vancouver’s luxury housing market broke all records in 2011, but there are signs that sales of high-end homes are starting to cool.

According to a report by Macdonald Realty, 691 homes sold for over $3 million last year, beating the previous record of 375 set in 2010 and more than tripling the 209 luxury homes sold in 2009.

“A lot of this is [more homes] surpassing the $3-million threshold we’ve set for luxury,” Dan Scarrow, vice-president of corporate strategy, Macdonald Realty Group, said in an interview Tuesday. “The threshold is coming down because prices are going up.”

However, Scarrow said the demand for luxury homes also started falling in August and is continuing to drop.

He noted that midway through 2011, Macdonald Realty projected there would be 722 sales of homes over $3 million for the year. The drop to 691 indicates a trend toward slowing luxury sales, especially since such sales have surged every year for the last seven years.

He said many of the buyers were from China, although local and other international buyers also fuelled the market.

“The pressure is definitely coming off for recent immigrants, predominantly from China. There are also buyers from other areas including Persian buyers on the North Shore.

“But the pace of people buying at a frenzied rate has come down. Even people from mainland China don’t believe that the increase in prices will go up at the pace of the past.

“Chinese buyers have only seen prices rise for the past 10 years in both Vancouver and throughout China. And with recent price drops in many Chinese cities, the myth that housing prices always rise has been expelled.

“We’re predicting a stable year this year, not a big increase on the luxury side.”

Rosario Setticasi, president of the Real Estate Board of Greater Vancouver, won’t make predictions on the sale of luxury homes for 2012 but also noted sales of such homes started dropping in mid-2011.

He said that 454 homes worth over $3 million sold in the first half of 2011. “You can see that there was a substantial drop in activity in the latter part of the year.”

Setticasi agreed that many homes are simply reaching the $3-million luxury threshold. “If we had 20 homes worth over $3 million [and] with the rise of the market, now we have 25 homes worth over $3 million.”

According to the Macdonald survey, the most expensive home sold in Metro Vancouver in 2011 was $16.8 million for a house at 4791 Belmont in Point Grey, while the most expensive condo sold for $10.1 million.

Scarrow said that for the past couple of years, there has been a “remarkable run-up in prices” in five areas with the highest concentration of Chinese buyers: Vancouver (Westside), Richmond, Burnaby, West Vancouver and White Rock.

He said the housing market in the rest of Metro Vancouver is similar to other parts of Canada, although that’s expected to change this year as price appreciation picks up in those municipalities.

“We predict that the east side of Vancouver will go up at a quicker pace than the west side of Vancouver, as many [sellers from the west side] move to a different area and pocket the difference.”

bmorton@vancouversun.com