Luxury real estate owners in south Guelph and Puslinch estate subdivisions have reason to be optimistic in the upcoming year. In my opinion, there are four key factors that will work together to influence the strength of the luxury market in 2018, specifically in the south Guelph and Puslinch areas.
We live in a great area….and everyone’s noticing.
South Guelph and Puslinch areas have always attracted the Greater Toronto Area (GTA) luxury buyer and in recent years, these areas have also become increasingly appealing to foreign buyers as well. A strong local economy, diverse industry, affordability and convenient location within south-central Ontario, combined with close proximity to excellent schools including some of Canada’s best universities, have always been driving forces for high demand in these areas.
Many luxury buyers specifically seek out rural property in established estate subdivisions such as Rolling Hills, Fox Run, Aberfoyle Creek Estates, Aberfoyle Mill, Audrey Meadows and Heritage Lakes, for their infrastructure, such as paved roads & street lights, sense of community, large property sizes, and proximity to amenities and access to Highway 401. Similarly, areas in south Guelph including Pine Ridge, Westminster Woods, and Kortright East, appeal to the segment of the luxury market that values luxury living, however prefers even closer access to amenities and ease in property maintenance.
They aren’t making land anymore.
This past year saw unprecedented supply and demand imbalances in the GTA and surrounding markets including Guelph and Puslinch. There was simply not enough inventory available in re-sale listings and new construction opportunities to meet the needs of prospective buyers.
Steady growth and increased demand are likely to continue in the years ahead, as the supply needed to meet this demand remains limited. The adage “they aren’t making land anymore” is especially true given the restrictions that municipalities have placed on land development, resulting in a shortage of land on which to build new homes. This also limits new construction opportunities for luxury homes on large/rural properties, which in turn strengthens, and bolsters the sale prices of the re-sale market.
Yes honey, we can afford it.
Another consideration is financing. Although a stronger-than-expected economy prompted the Bank of Canada to hike interest rates in 2017, and is expected to increase them further in the upcoming year, rates still remain historically low. With the increases, the Bank of Canada has pledged to take into account the effect this will have on consumers’ borrowing costs, so affordability is not expected to significantly affect demand in the real estate market.
What will the bank say?
New mortgage qualification rules being implemented in the upcoming year however, may have a notable influence on demand, particularly on where the demand will come from. In the past year, new mortgage qualification rules were put in effect for home buyers with down payments of less than 20 per cent. It was one key factor that drove buyers from the Toronto area to Guelph and surrounding areas, thereby significantly increasing the demand and resulting in soaring home prices in our area. Buyers who did not qualify for the purchase of a home of their choice in the GTA could still do so in the Guelph area. On January 1, 2018, similar mortgage qualification rules will be applied to buyers with more than 20 per cent down payment. While the new rules may limit the ability of some buyers from within our area to upsize to luxury homes, the significantly larger market effect may once again be the influx of luxury home buyers from the Greater Toronto Area.
Let’s sum it all up.
In my opinion, the luxury property markets in south Guelph and Puslinch areas are expected to remain strong in the upcoming year. Continued demand for luxury property, limited opportunity for new construction, low interest rates and soon to be implemented qualification rules, will all work together to positively influence the luxury market in these areas. Analysis of sales data, specifically in the luxury market segment of south Guelph and Puslinch estate subdivisions, will help further determine what to expect in the upcoming year on the basis of market trends. I will continue to offer updates on the luxury market throughout the year. In the meantime, let me know if you have questions and be sure to stay in touch.