Toronto’s luxury real estate outpaced Vancouver in 2016 and the city will likely remain a top destination for high-end property buyers this year, according to a report released Wednesday.
A total of 290 homes sold for more than C$4 million (about US$3 million) in the Greater Toronto Area in 2016, a 95% increase compared with the previous year, according to a year-end top-tier real estate report by Sotheby's International Realty Canada.
Out of the 290 sales of $4-million homes, 209 were recorded in the city of Toronto.
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In addition, sales of homes valued at more than C$1 million (about US$760,000) also jumped 77% from a year ago to 19,692. This was on top of the 48% gain in C$1 million sales in 2015 over 2014. The momentum is likely to continue in 2017, the report predicted.
Scarce inventory of high-end single-family homes, coupled with Toronto’s strong economic fundamentals, contributed to the huge growth.
"With natural boundaries like the lake and the Greenbelt, the Greater Toronto region has less developable land than other markets. As a consequence, there are less opportunities to add to the supply," said Brad Henderson, the brokerage’s president and chief executive.
A slowdown in the second half of 2016 in Vancouver, partly due to an extra 15% foreign buyers’ tax introduced in August, damped the annual luxury sales in the western coastal city. Sales of C$4 million-plus homes rose 36% compared with 2015, while sales of C$1 million-plus homes dipped 1% year-over-year, according to the report.
However, Vancouver saw faster price growth than Toronto in regards to the overall market in the final quarter of 2016, according to a separate report released by Royal LePage on Thursday.
The brokerage’s National House Price Composite showed that while home prices in Greater Toronto increased 16.1% year-over-year to C$720,761 (US$548,545) in the fourth quarter, Greater Vancouver soared 25.6% in the same period to C$1,230,718 (US$936,655).
"Toronto is relatively more affordable than Vancouver," said Phil Soper, chief executive at Royal LePage.
"Unlike Vancouver, where a price correction is underway, there is no relief in sight for the Greater Toronto Area—forward momentum and supporting fundamentals in the region are that strong," Mr. Soper added.
Vancouver’s home prices could see an 8.5% decrease in 2017, according to his prediction.
Write to Fang Block at fang.block@dowjones.com