Impact of B.C.'s foreign buyer tax wanes as March sales surge almost 50 per cent

JOANNE LEE-YOUNG
Published on: April 18, 2017

 

Blistering Toronto home price gains have federal and provincial politicians in Ontario talking about a speculation tax on non-resident home buyers. It’s a conversation happening privately as campaigning B.C. NDP and B.C. Green party politicians are calling to expand or double similar taxes here in the name of housing affordability.

Fresh statistics suggest the impact of B.C.’s foreign buyer tax for homes in Metro Vancouver is on the wane, with March sales surging by almost 50 per cent.

The number of units sold in the Vancouver area in March jumped by 48 per cent compared to February, which is more than the historical average of about 25 per cent. 

The sharp increase comes off a “relatively weaker January and February,” said Bryan Yu, deputy chief economist at Central 1 Credit Union, agreeing with others that, aside from the psychological aftermath of the foreign buyer tax, there’s also adjusting for the “pretty bad winter” in Vancouver this year.

Nevertheless, “things started to gain momentum as the weather improved,” said Royal LePage’s Port Moody-based broker Randy Ryalls.


He added that there have been some large sales increases in certain areas such as Burnaby, where the number of detached sales went from 47 in February to 100 in March and apartment sales increased from 137 to 220.

“It is definitely true that, outside of the top, things are very hot again,” said University of B.C. real estate finance professor Tom Davidoff, adding that aside from some initial numbers, he is also hearing chatter on the street that is reminiscent of frothier times. “I was walking around in Kits the other day and overheard a conversation: ‘it was $100K over ask, with no contingency and we still didn’t get it.'” 

In Vancouver, “the decline in the number of homes changing hands has slowed, as the lagged effects of the 15 per cent tax on foreign purchases seem to be dissipating. Many suggest that the Vancouver housing market has bottomed,” wrote Sherry Cooper, chief economist at national mortgage company Dominion Lending Centres on Tuesday.

Signs of this uptick are emerging as there is still some debate over the long-term effect of B.C.’s foreign buyer tax at a time when the B.C. NDP and the B.C. Green party have unveiled housing plans that call for greater government intervention in the real estate market.

The B.C. NDP proposed to close “loopholes that let speculators dodge taxes and hide their identities, and (charge) a yearly two per cent absentee speculators’ tax to crack down on empty homes.”

The B.C. Green party proposes a sliding scale for property transfer taxes peaking with a rate of 12 per cent on homes above $3 million.

It is calling for a foreign buyer tax of 30 per cent that would be applied to the entire province.

“Extending the foreign buyer tax across B.C. from Metro Vancouver is designed to ensure that other housing markets, in Victoria and elsewhere, are not targeted for speculation in order to avoid the tax.”

jlee-young@postmedia.com

 

 

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