Vancouver home sales fall — should the new tax on foreign buyers take credit?
Vancouver home sales fall — should the new tax on foreign buyers take credit?
Home prices are still high compared with last year though
Sales of residential properties in Vancouver have plunged a month after the British Columbia government levied an additional 15 percent tax on foreign home buyers. Experts, however, are divided over the extent to which the tax has impacted the Canadian metropolis’ overheating housing market.
Home sales in the Vancouver area, the most luxurious real estate market in the world, fell 26 percent in August 2016 compared to August 2015, according to the Real Estate Board of Greater Vancouver.
Sales of detached homes also dropped 45 percent last month. Wealthy non-local buyers tend to favour the detached housing market, according to Tsur Somerville, an associate professor at the University of British Columbia’s Sauder School of Business.
Dan Morrison, president of the real estate board, said it’s difficult to quantify the tax’s effect on the sales slowdown. “There’s no question the foreign-buyers’ tax is having an effect, and that effect is causing everybody to hold their breath and say, ‘What’s going to happen?’” he told The Canadian Press. “Certainly the first two weeks of (last) month, we saw a lot of that. However, as the month progressed, we saw it returning more to normal, whatever normal is in Vancouver.”
More: How the Chinese are reacting to Vancouver’s property tax hike
Advanced Education Minister Andrew Wilkinson said that it’s “early to tell” the effect of the tax vis-à-vis the housing market. However, last month’s dwindling sales volume may mean that the market is “calming down” in line with the tax goal.
Although sales have plunged, the composite benchmark price for all residential properties in Vancouver rose 31.4 percent to CAD933,100 (USD720,100) between August 2015 and last month.
Canadian national real estate brokerage Zolo recently reported that average prices of homes in the City of Vancouver had fallen 25.1 percent over the previous three months, suggesting that the market had been cooling before the new taxation rate.
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Source: Property Report