The luxury real estate market in the Greater Toronto Area (GTA) has seen significant growth in the final quarter of 2024. Specifically, homes priced over $3 million have experienced a notable surge, with some price ranges seeing increases of up to 58.5% in sales volume compared to the previous year.

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Market Performance in Q4 2024

• $3 Million to $5 Million Range: The sales in this segment saw a 40.5% increase year-over-year in Q4 2024. A total of 364 homes priced between $3 million and $5 million were sold in this period, indicating a strong recovery from the softer sales activity observed earlier in the year.
• $5 Million to $7.5 Million Range: Sales in this segment rose by 58.5% annually in the fourth quarter, signaling a significant uptick in demand for higher-end properties.
• $7.5 Million to $10 Million Range: Homes in this price range saw a 41.2% year-over-year increase in sales during Q4. This performance indicates that affluent buyers are increasingly confident in making high-value purchases.

These increases reflect a growing interest in high-end real estate, particularly in the final months of 2024.

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Full-Year Sales Performance for 2024

• $3 Million to $5 Million Range: For the full year, sales in this category rose by 3.9% over 2023, signaling steady growth in high-end home transactions.
• $5 Million to $7.5 Million Range: This price segment saw a 21.1% increase in sales for 2024 compared to the previous year, indicating continued strong demand.
• $7.5 Million to $10 Million Range: Sales in this segment increased by 18% year-over-year, further supporting the trend of rising interest in luxury properties.

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Factors Driving the Growth

The surge in sales can be attributed to several key factors:

1. Bank of Canada Interest Rate Cuts: Since June 2024, the Bank of Canada has lowered its benchmark interest rate by 175 basis points, including two substantial 50 basis point cuts in October and December. These rate cuts have lowered borrowing costs, making it easier for affluent buyers to finance high-end real estate purchases.
2. Higher Inventory Levels: Throughout 2024, there has been an increase in the availability of luxury homes. Higher inventory levels have allowed buyers more options and contributed to the increase in sales.
3. Softer Prices: Luxury home prices saw some softening throughout 2024, which provided more favorable purchasing conditions for high-net-worth individuals looking to invest in GTA real estate.

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The Role of Pent-Up Demand

The surge in high-end home sales has been partly driven by pent-up demand. After several years of more subdued activity in the luxury market, buyers who had been waiting on the sidelines due to higher interest rates or market uncertainty have been more willing to act now that conditions have improved.

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The Current State of the Luxury Market

With the recent uptick in sales, the luxury real estate market is poised to continue its positive momentum into 2025. Affluent buyers, who had been holding off on purchases, are now taking advantage of the more favorable economic conditions and lower borrowing costs.

The increase in sales in the high-end segments demonstrates a shift towards renewed optimism in the market. For the full year, overall sales for luxury properties in the GTA priced over $3 million are expected to continue rising as demand stays strong and interest rates remain relatively low.

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Conclusion

The luxury real estate market in the GTA has shown impressive growth in the latter part of 2024, particularly in homes valued over $3 million. Factors such as interest rate cuts, higher inventory levels, and pent-up demand have all contributed to this resurgence. Looking ahead, the market is expected to remain active as buyers take advantage of favorable conditions, while sellers can expect competitive offers for well-positioned luxury properties.

This trend suggests that affluent buyers are regaining confidence in the market, and with continued favorable economic conditions, the GTA luxury market is likely to maintain its momentum through 2025.