B.C. Liberals looking at tweaks to make homes more affordable

VICTORIA — B.C.’s finance minister is working on possible changes to the property transfer tax in the next provincial budget to address housing affordability concerns in Metro Vancouver.

Mike de Jong said the government hopes to have details to unveil in February’s fiscal plan, which is being developed now by his ministry.

“Is Vancouver going to suddenly turn into a low-cost housing market? No,” de Jong said in an interview Thursday.

“Nor, quite frankly, have we set that as the objective, because we have said for most families the equity they have accumulated within their home is their single biggest asset and our purpose is not to diminish that.

“What we’re looking at is how we facilitate greater access to the housing market.”

The average price of a single-family detached home in Greater Vancouver is now at a record high $1.47 million, having risen 20 per cent over the past year. The provincial and federal governments have come under increasing public pressure to make it easier for middle-income families to purchase a home in the region.

Premier Christy Clark has rejected calls to target foreign investors with tax hikes, even though some critics have blamed wealthy out-of-country speculators with driving up prices. Instead, the government believes the issue of housing affordability is primarily linked to supply and demand, with “a finite supply of land in Vancouver with an ever increasing demand,” said de Jong.

The government is considering altering the property transfer tax, which applies each time a property is sold.

First-time homebuyers are exempt from the tax if their purchase is under $475,000. Otherwise, the tax applies at one per cent of the sale value on the first $200,000 and two per cent on the value above.

One scenario could see government create a higher third-tier rate of tax on expensive homes, and use the revenue to “finance some measures of relief for the middle part of the market,” said de Jong, such as raising the $475,000 exemption threshold for first-time buyers.

The government is also exploring raising the threshold before the two per cent level kicks in, he said. But the $1.1 billion raised annually in property transfer taxes is also an important source of revenue for the provincial treasury and de Jong has said any changes can’t reduce that income.

There’s also no interest in targeting foreign investors who are snapping up Vancouver properties, said de Jong, Nor is there any intention to create a speculation tax that would penalize investors who buy properties and flip them for profit in a short period of time.

The finance minister said the public also needs to change its expectation about the type of housing that’s affordable.

“I’m not downplaying the cost, but a third of the homes sold in Metro Vancouver were sold for under $400,000.

“Now, they were condos. … And so this notion that it is impossible to buy a home in Vancouver is not true.

“It is difficult. It was difficult 30 or 40 years ago.”

“A third of the homes sold in Metro Vancouver were sold forunder $400,000. Now, they were condos.

MIKE DE JONG

B.C. FINANCE MINISTER