A number of developers are requesting higher down-payments from non-Canadian citizens in a bid to create occupied buildings and increase long-term property values, says one industry insider.
International buyers – accounting for an estimated 40 per cent of sales in the GTA last year - are now facing down payments of between 25 and 35 per cent by a number of builders, compared to the average 20 per cent required, said Rokham Fard, founder of TheRedPin.com.
He characterized the phenomenon as a trend starting late last summer as developers responded to demand by buyers for “neighbourhood-type buildings.”
A number of international buyers put their investment property on the market once development is complete or near completion, with Fard suggesting many developers want a “balance of units” to ensure suites don’t remain empty in turn affecting re-sale value in the long term.
He said this move provides first-time buyers the opportunity to get into the market.
“Buyers are a lot more selective now and they want to buy in a development that has a lot of life and activity, he said. “They want the neighbourhood feel within the confines of a condo development and you obviously do not get that if you have a high number of vacant units.”
Fard is aware of 10 developers that are steering away from the foreign investor market. However, not all developers are conscious of their current sales, especially in the face of ongoing negative media coverage about the state of the market.
“It is true that many just want the quick sales to offload units,” he told CREW. “The market has stabilized, there is no doubt about that, and consumer confidence is being impacted by the negative media coverage. I believe a move like this will give a boost to first-time buyers who may be influenced to buy in these downtown neighbourhoods.”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate