[:en]Last August, in response to what was seen as unwanted inflation in the greater Vancouver housing market, the British Columbia government implemented a surprisingly sweeping new policy: A 15% added sales tax on all foreign nationals buying property in the Metro Vancouver area.
The move was controversial. The issue of foreign buyers snatching up property and driving up prices to potentially-unsupportable rates is one which has affected more than just Vancouver. Cities around the world have begun to blame unchecked foreign investment for creating local housing bubbles and making property unaffordable for residents. Yet is such a heavy-handed move the answer, when it could potentially affect realtors across the area?
It’s hard to say. However, half a year later, one thing is certain: The new tax has had a significant effect on foreign purchases… but not so much on prices.
Quick Pass Masters Surrey Real Estate School Looks at The Vancouver Foreign-Sales Tax
Those watching the market trends didn’t even have to wait long to see what sort of effect the tax had on Metro Vancouver real estate. Prior to the tax’s implementation, foreign sales accounted for a little over 13% of area property sales. By the end of September – less than two months later – that had plummeted to only 1.3% of sales.
Clearly, it had the intended deterrent effect!
However, it does not seem to have had much effect on overall prices, particularly of condos and townhouses. Prices declined by around 2% towards the end of the year, but overall, there had still been a 17.8% increase in prices year-over-year compared to 2015. It seems that, at most, the tax merely put the brakes on rampant price inflation, rather than having a truly drastic price-cutting measure.
For realtors enjoying the high sale prices – particularly those engaged in other tactics such as “shadow flipping” which drive prices up higher – this means they can keep getting their big commissions. But when Vancouver is currently ranked as the #3 most unaffordable city in the world to buy property, it’s questionable how long these good times (for realtors) can last.
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