There’s no sign that a new 15 per cent tax on foreign home buyers in Metro Vancouver is driving offshore money to the capital region.
The latest government statistics show the share of foreign home buyers in the Greater Victoria market has declined from 3.9 per cent to 3.5 per cent since the tax took effect August 2.
“So the overflow that was anticipated from the Lower Mainland to Victoria doesn’t seem to be happening,” said Advanced Education Minister Andrew Wilkinson, speaking for the government October 28.
Statistics show foreign buyers were involved in 72 sales valued at $57.4 million in the capital region from August 2 to September 30. That’s compared to 90 sales worth $62.7 million from June 10 to August 1.
Real estate watchers had speculated that the new foreign buyer tax would send offshore shoppers to the capital region instead, where prices would be driven up by increased demand.
But Greater Victoria has not seen a higher-than-usual number of foreign buyers, Mike Nugent, president of the Victoria Real Estate Board, said Friday October 28. And now, higher-priced properties appear to be sitting on the market for a longer period of time.
Nugent said that while evidence is anecdotal so far, it seems fewer Vancouver buyers with deep pockets are crossing the water to buy here.
As the capital region’s market heated up earlier this year, Vancouver homeowners were selling homes and coming to Victoria to buy in core areas. They were willing to spend in the $1.2 million-and-up market, especially in Oak Bay, Saanich East and Victoria.
But as foreign buyers left the Vancouver market, that market cooled and sales dropped in that region, Nugent said.
As a result, Vancouver residents are likely staying put, rather than selling and moving to the capital region and other destinations, he said. “Those people are not spreading out amongst the province.”
Wilkinson said the new tax has had the desired effect in Metro Vancouver.
“The market has cooled down significantly, which is what our goal was, so that purchasers can make measured and timely decisions about the biggest purchase of their life,” he said.
“We’re seeing a shift in Vancouver to the same percentage of offshore buyers as in the rest of the province.”
Foreign home buyers were involved in 13.2 per cent of sales on the Lower Mainland prior to the tax taking effect. But that figure plummeted to 1.3 per cent from August 2 to September 30, statistics show.
“It’s early days yet, and we don’t want to draw any firm conclusions about the net effect of the tax for a few months to come,” Wilkinson said. “But the results to date are certainly in keeping with our goals and I can’t see any quick moves to change the regime we have in place right now.”
NDP housing critic David Eby said Premier Christy Clark should apologize for ignoring the problem for so long. “This tax reflected an about-face after years of denial on the part of this government and it’s families that paid the price for that denial.”
Eby said the government still needs to fix the clumsy nature of tax, which, he said, has hit “a number of people that it shouldn’t, namely people who are living, working and paying taxes in Metro Vancouver – skilled workers that we want to stay here.” Eby said they should be exempted from the tax.