The first half of 2012 was a very busy time for concrete condominium developers in Metro Vancouver, according to Jeff Hancock of MPC Intelligence, which tracks Metro’s new strata market.
As of the end of June, approximately 6,000 new concrete condominiums had been begun marketing in Metro Vancouver. This is a little less than MPC had originally predicted but still the busiest six months that MPC has recorded in concrete product since 2005.
“Of the concrete condos introduced year to date, 55 per cent of it had been absorbed by the marketplace. The first quarter saw the majority of these reported sales, with the second quarter showing slower uptake,” Hancock notes.
He adds that “incentives” are being offered to lure buyers and that, generally, new condo units are smaller than in the past.
MPC expects things to ramp back up in September, as another wave of concrete supply hits the market. However, if the market continues to soften, some of the planned new launches could be postponed to next spring, Hancock said.
New Canadian mortgage rates that came into effect this year, which reduce the maximum amortization to 25 years, and require larger downpayments for investors or those buying a second home could negatively affect the high-rise condo market, according to MPC.
“ It’s pretty safe to assume that demand from end user buyers will be negatively affected by the new rules. In a marketplace already challenged by affordability issues, any impingement on consumer’s access to capital will slow consumption. For investment buyers economically tied to Asia, the new rules will be less of an issue. These buyers are often putting substantial equity towards the purchase and are not necessarily using traditional financing,” Hancock said.
See Western Investor's September issue for a full report on residential investing.
