Vancouver Balances Housing Market, Offering Refund to Foreign Buyers
Foreign buyers in Vancouver, British Columbia — who paid an additional 15-percent property transfer tax last year — might see a refund this year.
In response to the city’s cooling real estate market, and in an effort to draw in a skilled foreign workforce, the government of British Columbia is considering this refund for buyers who become permanent residents soon after purchasing a home and for those who live in the province on work permits.
“Now that the additional tax has effectively cut back the excessive demand we were seeing last year, we are in a position to make the adjustments necessary to help ensure we can keep attracting highly skilled workers,” said the Ministry of Finance in a release.
Last August, British Columbia began imposing a 15-percent property transfer tax on foreign buyers in Vancouver to rein in soaring housing prices. In fact, the benchmark price for all residential properties in Metro Vancouver reached C$897,600 (US$674,664) for 2016, a 17.8-percent increase year-over-year, according to the Real Estate Board of Greater Vancouver.
However, the second half of last year saw signs of cooling as soon as the tax was implemented. During this time, the composite benchmark price for homes declined 2.2 percent. Benchmark prices for Vancouver West and West Vancouver, two of the most expensive neighborhoods, ended the year at C$1,193,800 (US$897,297) and C$2,468,300 (US$1,855,250), respectively. The prices represent 14.3- and 13.2-percent increases, respectively, compared with 2015. But over the second half of 2016, home prices in these two neighborhoods declined 4.5 and 8.1 percent, respectively.
Additionally, the number of monthly property transactions involving foreign nationals declined to 4.1 percent in November 2016, down from 13.2 percent in July, one month prior to the 15-percent foreign buyers tax implementation.
In the luxury market (homes valued at C$3 million and above), foreign buyers only purchased eight properties in November, a whopping 91-percent drop from July, and a strong signal that demand from wealthy foreign investors was decreasing.
Addressing the dip in Vancouver’s real estate market, Premier Christy Clark made an unexpected announcement in late January. During the Lunar New Year parade in Vancouver’s Chinatown, Clark told the crowd that foreigners with work permits would now be exempt from the province’s 15-percent foreign buyers tax.
But Vancouver isn’t only attempting to make housing more attractive to foreigners. The city is also imposing an empty home tax this year to ensure more affordable housing for locals.