What Politicians’ Promises Could Really Mean for BC’s Real Estate Market

A few days ago I submitted a Huff Post article about how each major party in the 2017 provincial election intends to tackle our real estate issues. But it’s always difficult to imagine a “what if” becoming a “what is.” Here’s a look at what politicians’ promises could really mean for BC’s real estate market.

One of the centralized topics for virtually every party was the recent introduction of the 15% foreign buyer tax, an amount The Green Party wants to see doubled to 30%. As outlined by a recent Business In Vancouver article, the Liberals’ have quite a different view. After already unloading the tax for international citizens who currently hold a B.C. work permit and pay taxes here, Premier Christy Clark has suggested compensating those who already paid the tax on a principal residence on or after August 2, 2016 with a retroactive exemption.

In a third corner is the NDP, which has proposed a retroactive foreign buyer tax that would make property owners who are non-citizens pay a buyer tax of 2% on the assessed value; this assuming said foreign national didn’t pay tax in B.C. on their income. The NDP’s also stated that this would apply to condo pre-sales.

In theory, most of this sounds like a good thing right? Increasing the foreign buyer tax could (theoretically) help cull home sales, causing bidding wars to fizzle and reintroduce the necessity of elements like home inspections. After all, just seven months after the tax was introduced, sales of single-family detached homes in the MVA slunk 47% below the year prior. Again, that’s a good thing right?

At least, it would be if the prices were dropping along with home sales.

While home sales sunk, the average home price has only fallen by a measly 4%. And in some neighbourhoods prices have even gone up. What we need are both a decent supply of housing, particularly condos and town homes, at prices we can actually afford. Because there just isn’t that many people who have $600,000 to plunk down on a $3 million+ home deposit, you know?

Yet another article from Business In Vancouver reported that the foreign buyer tax has actually “wiped $2 billion in equity out of the Metro Vancouver housing market, or about twice what B.C.’s Ministry of Finance had expected.” Not only that, the Canadian Real Estate Association has prophesied that B.C. housing sales will tumble an additional 17.5% in 2017, making it the worst year-over-year decline in Canada.

The financial losses accompanied by incentives such as the foreign buyer tax do not always come with a dollar sign attached; at least not an obvious one anyway.

In March, The Globe and Mail published an article that reminded us how much we need well-educated, savvy professionals. Concerned about losing tech-sector professionals in particular, who account for approximately 900 of the 6,000 work permits handed out in 2016, many local employers were deeply concerned about the effect the foreign buyer tax would have on their recruiting efforts when so many talented professionals were “already wary of the region’s unaffordable housing.”

As we can see, no matter how good the campaign promise, rarely is an issue as complex and dividing as our current real estate conditions able to be solved in one fell swoop. What’s needed is a systematic overhaul of a flawed system that can both protect those who are already here, while attracting the best and brightest from abroad.

As for me, I’ll be watching the polls and waiting to see who does (or doesn’t) live up to the hype.

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About Atrina Kouroshnia

Atrina Kouroshnia is an independent, licensed, mortgage broker in the province of British Columbia. She has a degree in Human Relations & Commerce, and past work experiences in HR & Real Estate Development. She comes to the table with great customer service and problem-solving skills. Her approach to finding the best mortgage solution involves both short and long-term planning, making sure her clients are in a suitable mortgage that is flexible to their needs.