Foreign buyers driving demand for luxury homes, Sotheby's says

International demand is expected to keep driving luxury real estate sales in Canadian cities for the rest of the year, according to a report from Sotheby's International Realty.

A faltering Chinese economy and volatile global stock markets are likely to encourage an influx of foreign buyers, especially from mainland China, the companysaid in its fall outlook report.

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Sotheby's notes the surge in luxury sales in the first half of the year, with sales of property in the $4-million range rising 71 per cent in Vancouver and 72 per cent in the Greater Toronto Area.

Toronto and Vancouver are Canada's hottest housing markets whereeven modest detached houses arepriced at over $1 million.

With interest rates low and stable employment in both cities, 2015 has seen huge demand for housing in both cities, with more buyers than homes on the market.

But the luxury segment is even hotter than the overall housing market in Toronto and Vancouver, Sotheby's said.

It predicts demand for condos over $1 million considered a luxury price for a condo will remain strong in both markets, especially near the downtown core. But the strongest percentage sales increases will be seen among detached homes in the $4-million range, it forecasts.

In Vancouver, demand for traditional luxury neighbourhoods will push high-end buyers east and south with neighbourhoods in Vancouver East and South Vancouver emerging as new options, Sotheby's said.

Montreal also saw a period of heightened interest in its luxury properties in the fall of 2015 after the election of a Liberal government, Sotheby's said. A luxury price in Montreal is in the $1.5-million range. The market is now more balanced, but foreign demand is picking up, it said.

"Along with demand from the Middle East and France, Montreal has experienced an uptick in buyers from mainland China seeking multiple properties or condo units in recent months, a trend that is expected to continue into the fall," the report said.

Only Calgary is predicted to see a slowing market this year, after several years of record-breaking sales.

"The performance of Calgary's high-end real estate market will remain contingent on the state of the oil and gas industry, employment rates and net migration," Sotheby's said.