B.C. tax could benefit Calgary

Levy might drive foreign buyers into city’s real estate market

Calgary’s real estate market could become more attractive to overseas buyers, realtors and experts say, in light of a new 15 per cent foreign buyer tax in B.C. aimed at cooling Vancouver’s overheated housing market.

“I’ve already seen it happen. I’ve had inquiries already from other provinces and other cities,” said Hong Wang, a Calgary realtor who deals primarily with immigrants and foreign buyers. “It’s not going to affect mega-money individuals, but I think it will affect ordinary investors. A 15 per cent tax is quite a lot of money for some people.”

The B.C. tax — which will apply to residential real estate deals in Metro Vancouver starting Aug. 2 — is an attempt by Premier Christy Clark’s government to address soaring housing prices, which some have suggested may be due to a high level of foreign investment. B.C. government data shows foreign buyers — mainly from China — purchased more than $1 billion worth of property in the province between June 10 and July 14, and 86 per cent of that was in the Lower Mainland.

There is no comparative data for Calgary, making it impossible to accurately estimate the level of foreign ownership in this city’s market.

But while industry insiders agree that foreign buyers are behind only a tiny fraction of real estate purchases in Calgary (far fewer than in Vancouver and Toronto), there is anecdotal evidence indicating overseas investment — particularly from China — is on the rise.

Juwai.com, China’s top international real estate website, has seen the number of inquiries about Alberta properties on its listing service increase “significantly” since the first half of last year, and especially in the last six months.

Matthew Moore, Juwai. com’s president of the Americas, said he believes Calgary may be of more interest to buyers in China now that it has a direct air link with Beijing, launched by Hainan Airlines last month.

“Some buyers might also be put off by the new tax in B.C., or by the feeling that prices have already over-appreciated in the more common gateway cities,” Moore said in an email.

According to an April report from the Canada Mortgage and Housing Corp., foreign buyers may currently account for a “substantial portion” of the demand for pricier, luxury single-family homes in Vancouver and Toronto.

Mary-Ann Mears, managing broker for Sotheby’s International Realty Canada, said Calgary is different in that a “good percentage” of the luxury market is still driven by locals.

However, she acknowledged there has been an increase in interest in recent months from foreign buyers.

A report released by Sotheby’s earlier this month showed that, despite the continued downturn in Calgary’s energy sector, real estate sales in the $1-million-plus market actually increased by nine per cent in the first half of the year.

“It will be interesting to see if because of this new tax (in B.C.), we see even more of an increase — not only in interest but in transactions,” Mears said.

The lack of statistical information regarding foreign ownership of Canadian real estate makes it very difficult to get a good sense of what is happening on the ground, said Gordon Houlden, director of the China Institute at the University of Alberta.

But he said it only makes sense that more Chinese capital is starting to flow into Alberta’s real estate market.

“Prices are rising so fast in Vancouver, particularly, that I think some Chinese investors may say, ‘Whoa!’ ” Houlden said.

“They’re either priced out of the market or they look at what they can get for a million bucks and see how much better they can do in Calgary.”

In B.C., the issue of foreign ownership of residential real estate has been charged with tension because of the perceived link to housing unaffordability.

But Wang, a realtor who specializes in helping new immigrants and foreign investors, said Calgary is a different case.

Not only could the sluggish Calgary real estate market benefit from some extra activity right now, she said, but the Chinese buyers she deals with are not speculators and they’re not purchasing homes and leaving them empty.

“I definitely work with a lot of Chinese buyers, but I wouldn’t call most of them investors the way you would some of the buyers in Vancouver,” Wang said.

“I actually work with a lot of parents of international students, who want to buy a property for their child to live in while they go to the University of Calgary or Mount Royal University.

“The majority of Chinese buyers I deal with are buying properties to use them.”