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Pre-sale condo action cools

By Frank O'Brien for Business in Vancouver

Pre-sales of new condominiums across Greater Vancouver and the Fraser Valley dropped from 91% of offerings in January to 50% as of June as the action shifts from “hyperactive growth to a more balanced, more normal market,” according to Suzana Goncalves, chief advisory office and partner of MLA Canada.

In its 2018 Mid-Year Market Review, released July 18, MLA, a Vancouver-based real estate market research firm, notes that pre-sale activity of new condo projects of from 50% to 65% is, historically, considered normal within the first six to eight months of a project launch.

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In the first quarter of 2018, 79% of new condos pre-sold sold but this dropped to 67% in the second quarter, which MLA described as still  “strong activity.” In the entire first half, 74% of the 7,753 new condos offered pre-sold. This is down from 87% in the same period a year earlier, according to Urban Analytics.

Goncalves suggested that the cooling sales could reflect government policies introduced in 2018, such as the increase in the foreign-buyer tax, stricter lending regulations, most notably the expanded mortgage stress test, combined with rapid price appreciation.

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