According to Reuters in November 2016, the condo market has been booming in Vancouver, some agents stated that local and foreign buyers are racking up units that are not yet completed.
The prices of condos has skyrocketed so rapidly that some condo owners have been flipping their units before construction is finished. This enables foreign buyers to take advantage of price gains without paying the British Columbia’s 15 per cent levy that was implemented last year for Vancouver real estate transactions.
A report by Reuters shows that they nearly doubled in downtown Vancouver since the end of 2015. The prices of presales or unfinished condo units are not public but prices of resale condos has risen by 33 per cent nationwide.
As indicated by Urban Analytics, the most popular section contains small units that attract first time buyers and investors. People camp outside sales offices for days trying to make a purchase, says agents. “The pace of sales right now is like nothing I’ve ever seen before, and I’ve been in this industry for 10 years,” this was stated by Vancouver agent Amar Pal, a specialist in presales.
This resulted in a decline in the available condos to just 31 units this year. It is now at 84 units, dropped from a high of 2,217 in the year of 2013.
“I refer to flippers and assigners as the scalpers of real estate because they are taking advantage of the limited supply,” Urban Analytics principal Michael Ferreira said, also noting that there must be a new record to put an end to speculation.
Presale flipping is becoming so widespread that Vancouver developer Reliance Properties are charging a 25 per cent fee on profit the buyers make from selling their units before completion.
The British Columbia’s government says it will be going over its policy “to close speculation loopholes, and reduce tax fraud’ in real estate. This will mostly affect foreign buyers, as well as Vancouver developers and real estate agents and favor the locals of the city.
“I think the whole offshore (Canadian) market lost about half its customers,” said David Hui, a sales director at Centerline Property Agency in Hong Kong. He also said that foreign buyers in Canada are still investing.