Jeff Qiu from Vancouver-based Royal Pacific real estate company said: “I don’t believe the government would do such rash decision, which will not only hurt the foreign buyers, but also we the house sellers and real estate agents”.
Advertisement
The Financial Post quoted Vancouver real estate lawyer Tony Spagnuolo as saying he expected a “domino effect” in which people waiting to close on a house they are selling will be short of cash when it’s time to buy because the first deal falls apart.
Jonathan Cooper, vice-president of operations at MacDonald Realty, expects many cases to go to court because deposits are held in trust by realtors and usually can’t be released without a court order.
Rob Philipp, CEO of the Fraser Valley Real Estate Board, said collapsed deals are “100 per cent happening”.
“Certainly I think Toronto and potentially other markets like Montreal will start to become more attractive, because comparatively speaking they will be less expensive”, said Henderson.
The new law, which took effect on Tuesday, imposes a one-time tax on foreign buyers, foreign-register corporations and Canadian corporations controlled fully or in part by foreign nationals or foreign corporations.
A screencap of a tweet from “condo king” Rob Rennie. The tweet is no longer accessible at Twitter.
Single-family home sales in Richmond, Burnaby and Vancouver fell from 106 three weeks ago to just 12 in the week after the tax was announced, a drop of 89 per cent. Such buyers will now pay this tax on the residential component of the foreign interest.
Rennie has since told The Globe that he was making an educated guess about the tax, but that he is willing to step down as the chief fundraiser for the Liberals if asked to by the party.
Premier Christy Clark and Finance Minister Michael de Jong, discuss amendments regarding housing issues in Greater Vancouver from the South lawn during a press conference at the Legislature in Victoria on July 25.
The goal is to slow the runaway growth of housing prices.
The legislation also introduces an anti-avoidance rule, steep offence penalties and a lengthy time period for reassessment (six years instead of the one year period, for the basic transfer tax), specific to the 15% additional tax.
Surprisingly, for a 19-day period starting from June 10 of this year, only 3% of all deals made in Vancouver involved foreign buyers, amounting to approximately 5% of the value of all transactions.
“It’s a complete shock, a nightmare”, Eric Kong said.
It was low sales across the region, however, that has broken a longtime trend. One sympathizes with the buyers and sellers blindsided by the new tax.
“Home sale activity showed some moderating signs in late June and this carried into July”, said Dan Morrison, president of the Real Estate Board of Greater Vancouver, in a statement.
But prices haven’t followed sales down.
Advertisement
The federal government does not publish data on the nationality of home buyers in Canada, but some commentators have blamed property price rises running at more than 20% a year in the Vancouver area on foreign buyers pushing up demand.
