Just recently BC instituted a 15% tax for foreign buyers of property purchases. And now you have the predictable reaction from real estate agents that it has suddenly become much harder to sell.
For one, that might be true but it is way to early to tell what the long term effect of the change will be. All the belly aching that is happening now is just a knee jerk reaction to the new situation.
I do agree that the ‘retroactive’ nature of the new tax is a bit of a dick move by the government. Any deal that was in negotiation should have been grandfathered in. For something that costs this much money, suddenly having to add 15% to your already stretched budget is not going to go over well.
However, will this 15% tax really have that much an effect? Maybe. Hard to say at the moment. Until other provinces adopt the same sort of tax Vancouver may see a decline in housing prices. The problem is, is 15% loss in money a big enough deterrent for these buyers. Vancouver is hugely Asian so there is still quite an attraction to owning here for that foreign market. We will lose some sales to Toronto but I think we will still be influenced by the Asian market even with the new tax. They will just factor the new tax into their pricing and we still end up with a spiraling market again.
A lot of these buyers are trying to put their wealth offshore, out of reach from their local government. They are already losing some of that capital in our market before the tax, so buying in our market after the tax is just a different sort or loss.
My guess is that the prices here may drop to less than 15% from other markets. Then at least the benefits of buying here versus there are about the same. The loses will be about the same.
So a place that used to cost 1,000,000 here before the tax may sell now for 850,000 instead. Which is still utterly out of reach for a lot of people. However I figure that if Toronto had a similar place for 1,000,000 then the place in Vancouver would still fetch over 900,000 for the same buyer due to Vancouver’s higher attraction for said buyer.
Will this change things? A lot of people are hoping it will. I am one of them but the pessimist in me is saying do not count on it.