While rapid population growth and strong economic initiatives have served to fuel activity in the luxury segment of the London real estate market in recent years, talk of US tariffs on the steel and automotive industries have given would-be purchasers reason to pause, with many buyers at the top end of the market adopting a wait- and-see approach.
Luxury sales over $1 million represent approximately eight per cent of overall home-buying activity in the London real estate market this year. Seventy-one properties sold over $1 million in the first two months of the year, up 22 per cent over the 58 sales that occurred during the same period in 2024. Falling interest rates and government changes including extending mortgage insurance to $1.5 million and raising amortization periods to 30 years helped to propel activity early in the year, but since mid-February, there has been pullback in the market as concerns over the economy and stock market volatility grow.
Housing values at luxury price points have softened as inventory levels climb, with the number of homes listed for sale nearing 400. Communities within the city, including North London and Southwest London, and on the periphery in areas such as Dorchester and Ilderton continue to draw buyers in the top end, with well-priced properties selling within a reasonable amount of time.
Multi-generational housing has experienced increasing demand in the London real estate market, with two-unit homes with a detached third unit now permitted. Affordability has played a role in the growing demand for these types of properties. Some developers are now building purpose-built, two-unit homes that allow buyers to offset mortgage payments by renting a portion of their home.
Population in the London CMA has soared in recent years to almost 630,000 people, according to Statistics Canada, with the city adding more than 40,000 new residents since 2021/2022. The local government remains vested in economic growth, with significant growth and investment realized in the technology sector, as well as manufacturing and agri-food processing. London remains progressive in land development, ensuring that the infrastructure on tracts of land along Hwy. 401 are shovel-ready for new plants and industry that will bring more jobs to the community. As economic stability returns to the region and interest rates decline further, home-buying activity, especially at the top end of the market, is expected to rebound.
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