07/08/2014 07:23 EDT | Updated 07/08/2014 11:59 EDT

Luxury Home Sales In Canada See Massive Growth: Sotheby's

Sales of million-dollar homes in Canada’s largest cities shot through the roof in the first half of this year, according to luxury real estate agency Sotheby’s International Canada, which expects the market to heat up even more in the second half of this year.

But the report does not address the potential impact of Canada Mortgage and Housing Corp.’s decision last month to stop insuring mortgages on homes above $1 million.

The Sotheby’s report found sales of homes priced above $1 million soared 34 per cent in both Greater Toronto and Vancouver in the first half of 2014, compared to the same period last year.

Calgary’s booming economy helped propel million-dollar sales in that city by 17 per cent compared to a year earlier. And even Montreal — where overall house prices and sales have flatlined over the past year — saw an 11-per-cent jump in million-dollar home sales.

In Toronto, luxury condo sales soared 53 per cent compared to the same period last year, “despite fears of oversupply,” the report said. All GTA condo sales above $4 million sold for more than the asking price, the report said.

And Sotheby’s expects the trend to accelerate. “Given strong economic fundamentals, increased consumer confidence and mortgage lending rates that remain at historical lows, all markets are expected to gain momentum in the latter part of 2014,” the report said.

(Keep in mind Sotheby’s is in the business of selling these high-end homes.)

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Canada's Most Expensive Homes For Sale

So does this mean that the ranks of Canada’s rich are growing so fast they can buy far more luxury homes this year than last?

Probably not. A $1-million house hardly buys you luxury in Toronto and Vancouver. The average price of a standalone house in Toronto passed $1 million this spring, according to Teranet. Vancouver passed that milestone several years ago.

As Sotheby’s hinted in a previous report, the line between the luxury housing market and the “regular” housing market is beginning to blur in these cities.

Mortgage rates are even lower this year than they were last year, as banks face increasing competition from independent mortgage lenders.

This means a larger percentage of (high-end) earners can now afford a mortgage on a $1-million property. This, more than a rapidly growing class of wealthy elite, likely explains the soaring numbers.

One thing that could put downward pressure on this market is Canada Mortgage and Housing Corp.’s decision last month to stop insuring mortgages above $1 million.

The move was seen as the latest regulatory attempt at cooling off an overheating housing market. Opinion is split on how much impact it will have; only about 3 per cent of mortgages insured by CMHC last year would have been affected by the new $1-million rule.

The Sotheby’s report did not address this change, but it did mention another regulatory change: The elimination of the Immigrant Investor Program that allowed wealthy foreigners to receive landed immigrant status in exchange for an $800,000 interest-free loan to the government.

While some market observers expected this to sink luxury home prices, particularly in Vancouver, the Sotheby’s report said the luxury market has seen “no impact” from the change.

“International demand [for Canadian luxury homes] is expected to remain strong,” Sotheby’s wrote.