“Government has had a long time to take action on the affordability issue, yet they decide to bring this new tax in over a long weekend, with no notice, and no time to prepare”, he said.
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President Elect of the Fraser Valley Real Estate Board Gopel Sahota says he thinks most buyers who choose Vancouver do so for a reason.
De Jong said recent government housing data indicate foreign nationals spent more than $1 billion on B.C. property between June 10 and July 14, with 86% on purchases in the Lower Mainland area.
In the City of Vancouver alone, foreign buyers comprised 11 percent of property transactions over that period, compared to 18 percent in Burnaby, 18 percent in Richmond, and 8 percent in Surrey.
Australia also imposed its own regulatory restrictions and tighter lending policies on foreign buyers, and Canadian Imperial Bank of Commerce (CIBC) economist Benjamin Tal states there are some early signs of success as the share of foreign nationals in demand for new housing has fallen.
“Every law firm that does real estate conveyancing is scrambling to keep the client from having to pay that additional 15 per cent if they are foreign nationals.”
The new tax would, for instance, slap foreign buyers with an additional $300,000 in costs on the purchase of a $2-million dollar home.
“There are a lot of things happening in the housing market that are making housing more expensive”, Clark told reporters.
“People who use housing exclusively as a means to make money – rather than living and working in Vancouver – should be taxed as such”, Vancouver Mayor Gregor Robertson said in a statement. The City of Vancouver will design the framework of the vacancy tax, including details, like the tax rate when it will apply and any necessary exemptions.
De Jong admitted foreign investment is “only one factor” driving up prices.
Jock Finlayson, executive vice-president of the Business Council of B.C., said it should have “some effect in dampening the demand” for real estate, particularly the single-family houses that have shot up much faster in price than townhomes and condos.
The tax echoes measures taken by cities like Hong Kong, Singapore and Melbourne, which have all introduced some sort of additional stamp duty on foreign buyers.
De Jong also downplayed the impact of Quebec’s immigrant investor program, which extracts revenue for that province from arriving Chinese investors who critics say often ultimately settle in Vancouver.
All in all, what on the surface may look like the government addressing the home price problem is nothing more than window dressing to buy votes when we go to the polls next spring.
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“This growth has accelerated in the past 12 to 18 months”, the report says, adding that the Canadian Real Estate Association says Vancouver experienced a 32 per cent year-over-year increase in house prices in June alone.
