Condo presales are still going strong even in the wake of BC’s new 15% tax on foreign homeowners. In fact, according to the Vancouver Sun, almost all the presale units under construction downtown have been snatched up, resulting in record-breaking sales this year.
Although the market for single family homes is slumping, industry watchdogs say it’s too early to tell whether the tax will catch up with presales.
“This is all the stuff that hasn’t been owned before,” said Fifth Avenue developer Scott Brown.
“Years ago, 50 or 60 percent of the units would be sold at the opening of presales, and the developer would sell the rest over the months and after completion. Now, more and more people are buying prior to completion. The demand for multi-family units is growing, and the supply can’t keep up.”
Condo Presales in 2016
Almost 13,000 units were sold across Metro Vancouver in the first half of this year, surpassing the total for each of the years between 2010 and 2014.
Brown also said that condo presales could even hit 20,000 for the first time and indicated that if there’s a downturn in the market for presales in coming years, it will likely be due to a lack of project launches than the effect of the foreigner tax.
Interestingly enough, presales often remain uncalculated in MLS Data. Robyn Adamache, a senior analyst at CMHC, said the federal housing agency does not record presales, and only records purchases once the building is complete.
However, at the end of July, 99 percent of completed condo units had been sold, compared with a 76 percent average over the previous five years. The statistics for townhouses also jumped a comparable 22 percent in this timeframe.
$1.2 million for 700 square feet
According to Anne McMullin, President of the Urban Development Institute, the activity is driving up the price of high-end downtown properties to new heights—as much $1700 per square foot, which translates into about $1.2 million for 700 square feet.
As far as the market goes, the unprecedented rate for presales shows that demand for property is still high in Vancouver, with some experts predicting that the shock from the buyer’s tax could start wearing off as early as the middle of this month.
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