How the foreign buyers tax is affecting the market after one week
Posted August 8, 2016 11:23 am.
Last Updated August 8, 2016 11:29 am.
This article is more than 5 years old.
The foreign buyers tax has only been in place for about a week but we’re already starting to see what kind of effect it might have on the local market.
Dan Morrison with the Real Estate Board of Greater Vancouver asked agents to estimate how many sales may fall through because of the tax, and the number he got back was 427.
He adds that’s just a prediction which is “far from scientific,” but he adds it could be just the beginning of things to come.
“That was the number that came back to us. It certainly wasn’t a huge sample size but it was certainly an indication that it was lots of impact.”
He adds it could take a while before we’ll really be able to determine the full effect of the tax on the housing market, especially when you factor in new home sales and the fact some potential buyers may not walk away until days before a sale’s closing date.
“The truth is we won’t know for about a year or year and a half what the true impact is. All these transactions close at different times, especially some of the pre-sales and new houses — those sales can’t complete until the house is actually finished,” adds Morrison.
The provincial government implemented the tax to single out foreign buyers as a way to cool demand in the red-hot real estate market. To give you context, the tax will amount to $300,000 on the sale of a $2 million home.
The tax can be increased and decreased between 10 and 20 per cent. Regional districts outside of Metro Vancouver can also be included if the tax pushes foreign buyers to other areas.
Recently, the premier promised anyone who attempts to cheat the system through loopholes in the legislation will be caught and every transaction will be audited.
