Vacation property prices will dip in B.C.
‘Recreational’ homes to become more affordable as new tax will discourage buying, prompt sales
Some of Canada’s prettiest and priciest real estate could be a little more affordable this fall, if you don’t mind a pesky tax or two.
Prices for “recreational property,” such as second homes, in British Columbia will drop in 2018 as a new tax to deter speculation and check real-estate values spurs some to sell and discourages others from buying, according to a forecast by brokerage firm Royal LePage.
The average price is expected to fall by 2.8 per cent to $531,333.
The new speculation tax, put in place this year by the provincial government, will ding owners of non-primary residences in certain areas, including some parts of the metropolitan Vancouver region, by about 0.5 per cent of the property’s value. Next year, it will rise to 1 per cent for Canadians outside the province and 2 per cent for foreign buyers.
The taxes will “weaken markets across the province, driving would-be purchasers to invest elsewhere,” Royal LePage president Phil Soper said. “While these policies were billed as a move to impede speculation and foreign investment, international purchasers make up a very small portion of the recreational market, and the dreaded ‘house flippers’ are an urban phenomenon.”
In other words, the new rules will prompt some owners to sell their second homes and push down prices as supply grows and buyers, many from neighbouring Alberta, look elsewhere, Royal LePage predicts.
A tax of 1 per cent might not seem enough to put an eager Albertan second-home hunter off a $500,000 purchase. But the taxes’ escalation — and fears of more to come — in what is already among the most expensive markets for second homes in Canada could send a chill across the Rockies, Adil Dinani, an adviser at Royal LePage, said in an interview.
For Canada’s recreationalproperty market as a whole, Royal LePage expects to see growth this year of 5.8 per cent, to an average of $467,764, buoyed by affluent Gen Xers (whom the report pegs at 36 to 51 years old) and retiring baby boomers.
Ontario’s and Alberta’s markets will lead the increase, up 10.4 per cent and 8.9 per cent from last year, respectively, to $535,885 and $770,100.