Transfer tax may heat up other housing markets
Foreign buyers could start looking to Victoria, Whistler, Fraser Valley
Municipalities outside Metro Vancouver will be watching closely to see if the foreign buyer transfer tax announced this week will affect housing markets in their communities.
On Monday, the provincial government introduced legislation that sets the property transfer tax at 15 per cent for purchasers of residential real estate who are foreign nationals or foreign-controlled corporations.
According to the latest statistics collected by the province, foreign nationals invested more than $885 million in B.C. property between June 10 and July 14, more than 86 per cent of it in the Lower Mainland.
The new tax will take effect Aug. 2 and affect residential property purchases in Metro Vancouver, excluding the Tsawwassen First Nation treaty lands.
“At the margin, this is very likely to lead some foreign buyers who want to invest in B.C. residential real estate to focus on other markets where the higher (property transfer tax) doesn’t apply — the Fraser Valley, and perhaps Kelowna, Victoria and Whistler,” said Jock Finlayson, executive vice-president of the Business Council of B.C.
Charles Wiebe, president of the Fraser Valley Real Estate Board, said many foreign buyers are looking to live or own specifically in the areas in which they are purchasing, and a tax may have little effect on their decision. Finlayson agreed.
“Any noticeable impacts will only be visible over time,” Wiebe said.
Whistler Mayor Nancy Wilhelm-Morden said foreign investment is not a new thing in her community; however she doesn’t want to see the same kind of speculative investment that takes place in Vancouver.
“That is what our concern is,” she said.
Wilhelm-Morden said she has no idea what will happen in Whistler because “this is all uncharted territory,” but she’ll be interested to see if there is an impact.
Chilliwack, on the other hand, has little foreign real estate investment.
Mayor Sharon Gaetz said her city is struggling with homelessness and a lack of affordable housing, but she’ll be watching to see if the tax has a “trickle-down effect.”
Finlayson noted that the government has reserved the right to apply the tax in other areas in B.C. if necessary and the finance minister has already hinted that if foreign buying pressure does migrate to other regional markets, the province could take action. One region the minister mentioned in particular was the Capital Regional District, which includes Victoria.
Victoria Mayor Lisa Helps said she was not surprised to see her region mentioned as a place where the tax may be extended because she has brought the housing situation in Victoria to the province’s attention on more than one occasion.
“It’s impossible for a working person or young family to buy a house,” she said. “It’s impossible.”
Helps would not speculate on whether the tax will push foreign buyers into Victoria’s market, but said she will be watching the data released by the government in the coming months and, if there is a change, she expects the province to act accordingly.
“I would like the province to make decisions based on data and not based on what some mayor in Victoria thinks might happen,” she said.