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The introduction of the mortgage stress test brought “turmoil” to the luxury homes market as buyers moved to the sidelines, says report from a leading real estate brokerage.

Luxury home prices across Canada have remained “relatively resilient” this year so far despite lower sales in the Greater Toronto Area (GTA) and Greater Vancouver, according to the latest figures from Royal LePage.

According to a report released Thursday, the firm said sales in GTA and Greater Vancouver were “significantly” down in the first four months of 2018 as both sellers and buyers adjusted to federal and provincial measures affecting both domestic and foreign buyers.

Royal LePage added that the introduction of a mortgage stress test brought market “turmoil” at the beginning of the year. Buyers moved to the sidelines in order to gauge the impact on luxury home prices, similar to what was witnessed in the overall residential resale market.

The firm also pointed out British Columbia’s tax increase for all homes over $3-million through increases to the property transfer and school tax. The non-resident property tax included in Ontario's 16-Point Fair Housing Plan dampened price expectations for the GTA region.

"Home prices in Canada's luxury real estate market have remained remarkably resilient when you consider the economic headwinds that serial government interventions have created," Phil Soper, Royal LePage, president and CEO, said. "The resilience of home values reflects the strong aspirations of luxury buyers to reside and work in cities that are consistently ranked among the most desirable on the planet."

For the January to April period, luxury condominium in Greater Vancouver and the GTA outpaced that of a luxury detached home, with median condominium prices rising by 7.0% and 10.4% year-over-year, respectively. For the same period, the median price of a luxury condominium in the Greater Montreal Area and Ottawa rose by 3.9% and 4.0%, respectively, while Calgary posted the only decline, decreasing 6.1%.

The Greater Montreal Area posted the largest year-over-year price gain in the detached luxury home segment, increasing 9.1% to $1,569,515 in the first four months of the year. During the same period, detached luxury homes in Ottawa (6.3%) and Greater Vancouver (5.2%) also saw prices rise, while home values in Calgary (0.6%) and the Greater Toronto Area (-0.2%) remained flat.

"Somewhat unusual in historical terms, and reflecting an important demographic shift happening across North America, appreciation in the luxury condominium market is outpacing the traditional target for large value residential property investment, the detached house," said Soper. "Baby Boomers are finally exiting their large family homes, and luxury condos, with their low maintenance lifestyles, are the favoured destination.