Province opens coffers for new affordability plan
$500 million going toward housing after transfer tax take balloons
Premier Christy Clark will launch her government’s promised housing affordability plan next week, spending almost half a billion dollars from windfall real estate taxes to increase housing supply across the Lower Mainland.
B.C.’s take from property transfer taxes was sharply higher this year because of the increase in sales and prices in the real estate sector, Finance Minister Mike de Jong said Thursday. The province is expecting to take in $2.2 billion in property transfer taxes, a rise of $965 million from its February prediction, he said.
Besides the $500 million to be spent this year on housing, he said $800 million is set aside for the next two years for additional housing programs, climate leadership and other priorities.
“We expect housing initiatives to continue and have already made provisions for that in the fiscal plan,” de Jong said at a quarterly financial briefing in which he announced B.C.’s surplus was projected to grow to $1.94 billion this year.
The announcement next week is expected to address at least part of the supply problem that the premier has said is an underlying cause of recent skyrocketing housing prices. Clark has said locals are squeezed out of the market by an influx of wealthy foreign buyers and a lack of condos or homes available to purchase or rent.
De Jong offered few hints on government’s plan and wouldn’t say if it also contains provisions to help renters forced out of the market by rent hikes and by landlords who would prefer to put their units into short-term rental services like Airbnb.
The premier has made increasing rental supply, particularly in Vancouver, one of the goals of any housing plan. Housing Minister Rich Coleman has said he’s exploring partnerships with municipalities, Ottawa and the private sector to leverage the limited cash.
In addition, B.C. expects to earn $165 million this year on the new 15 per cent foreign buyer tax it imposed on Aug. 2. That rises to $255 million next year( on the assumption foreign citizens purchase five per cent of 40,000 home sales at an average price of $850,000). De Jong said he remains “nervous” about the housing sector and the tax estimates, and so has increased the government’s contingency fund to brace for any shortfall.
Next week, the government will release figures on how home sales were affected by the foreign buyer tax in August. Realtors and industry analysts have said MLS listings have dropped since the tax, and figures prepared for Postmedia News by juwai.com, a website popular in China, indicate buying inquiries from mainland China for Vancouver property have plunged 81 per cent.
“We have to be cautious about drawing conclusions on the basis of August because August was not a typical month,” de Jong said, adding that many people bumped their purchases up to July to avoid the tax. “I think more revealing will be the data we’ll release for September and October in terms of evolving trends.”
He added that “no one knows for certain” the effect of the tax yet.
NDP finance critic Carole James said the government is reaping the financial rewards in taxes after refusing to help on housing for months. “They are the ones that created the mess in the beginning,” she said.