As the real estate market in British Columbia continues to weather a storm of economic uncertainty, evolving government policy, and shifting buyer sentiment, luxury homes have emerged as a resilient segment driven by lifestyle, exclusivity, and long-term investment potential. Though Metro Vancouver’s high-end sector has shown some volatility, demand for luxury homes in enclaves including West Vancouver, Whistler and Kelowna remains strong, particularly among domestic buyers.

With foreign investment restricted and inventory levels fluctuating, what does 2025 hold for the province’s luxury real estate market? Garde MacDonald, our Director of Advisory here at MLA Canada, shared his thoughts on how buyer demand, government red tape, and investment trends are influencing the sector to start the year.

How Much Do Interest Rates Impact Luxury Sales?

While interest rates understandably hold some influence over all corners of the market, the luxury segment operates largely independent of borrowing costs. As high net-worth buyers often pay in cash, or with substantial down payments, short-term mortgage rate fluctuations are a lesser concern with this type of investor, in contrast with the broader market.

“The luxury home segment is barely impacted by short-term interest rate movement, primarily due to the wealth of the buyers in this segment,” says MacDonald. “For luxury buyers, location, lifestyle, and developer brand are far more important than movement in interest rates.”

Though declining rates may fuel demand in other segments, luxury buyers are motivated by exclusivity, long-term value, and lifestyle considerations over financial incentives—a promising factor for high-end developers angling to hit the right target market, at the right time.

The Impact of Foreign Buyer Regulations

For decades, foreign capital has played a major role in Metro Vancouver’s luxury market, particularly among ultra-high-net-worth investors from China, the U.S., and Europe. However, Canada’s foreign buyer ban, along with a decade of policies discouraging international investment, has shifted the market toward domestic demand.

“There has been almost no change to the luxury segment over the past year,” says MacDonald. “If anything, the luxury segment is worse off due to political uncertainty in the U.S. and Canada. Current demand is almost entirely domestic due to the foreign buyer ban and negative sentiment toward international investment that has been perpetuated by the federal government for a decade.”

Without international capital fueling luxury sales, developers and sellers are increasingly relying on local end-users and intergenerational wealth to sustain demand—creating some questions about how the sector will continue to move product with fewer qualified buyers looking to invest.

Luxury Demand in the Okanagan and Short-Term Rental Restrictions

The Okanagan Valley remains a highly desirable market for affluent buyers, particularly those seeking secondary residences and waterfront properties. While the province’s stricter short-term rental (STR) policies have reshaped investor sentiment and slowed development in the region, high net-worth buyers may continue to buck the trend.

“Luxury buyers are not the types of buyers who list properties on Airbnb or use their homes as short-term rentals,” says MacDonald. “They are more likely to use their homes for personal use and leave them empty otherwise.”

While end-user demand for primary residences and long-term investment property continues, the potential for a cooling luxury market in the Okanagan remains to be seen. As MacDonald adds, “The ban on STR in BC has negatively impacted the market and effectively turned the taps off for development, tourism, and sentiment in the Okanagan.”

Which Luxury Product Types Are Performing Best?

Across BC, single-family homes remain the dominant luxury asset, offering space, privacy, and exclusivity. However, luxury condominiums in vacation destinations like Whistler and the Okanagan continue to attract buyers who value turnkey convenience over detached estates.

“Single-family homes are the most synonymous with luxury buyers as they offer the space that these buyers enjoy,” says MacDonald. “That being said, luxury condominiums in vacation markets—like Whistler and the Okanagan—will always have buyers, as they offer turnkey vacation solutions in markets with limited supply.”

However, many luxury markets have seen flat price growth for years, causing some buyers to reassess their purchases from an investment standpoint. For example, the detached home market on Vancouver’s west side has remained stagnant since 2018, raising questions about long-term appreciation potential.

Key Market Forces Shaping Luxury Real Estate in 2025

Several factors will shape BC’s luxury real estate market in 2025, including:

• Oversupply in the condo market – While this is more pronounced in the mid-market segment, negative sentiment around condos in general could influence luxury multi-family sales.

• The 2025 Canadian federal election – Political uncertainty could lead to policy shifts affecting capital gains taxes, foreign investment, and housing regulations.

• Changes in U.S.-Canada relations – The threat of tariffs and political shifts south of the border could influence cross-border investment and overall economic stability.

Despite these factors, MacDonald reiterates that luxury demand exists outside of normal market forces.

“Luxury buyers are not as susceptible to short-term market changes, so in many cases, homes will be bought or sold based on feel versus investment metrics,” explains MacDonald.

For many high-net-worth buyers, the emotional and lifestyle value of a property continues to outweigh traditional market considerations.

Final Thoughts: Luxury Real Estate’s Evolution in 2025

While Vancouver’s luxury sector faces challenges, demand remains strong in suburban and vacation markets that offer space, exclusivity, and lifestyle appeal.

For developers and real estate professionals, staying ahead means understanding the factors shaping high-net-worth buyer decisions, including changing regulations, evolving investment strategies, and shifting product preferences. In a market where prestige, location, and living well remain the ultimate drivers of demand, those who align their strategies with what truly matters to luxury buyers will be best positioned for success in 2025 and beyond.