According to a report posted by Central 1 Credit Union, British Columbia’s hottest real estate markets will remain strong till 2017, despite the capital gains tax imposed on foreign investors—which is seriously affecting Metro Vancouver.
However, experts predict that the trend will even out and benefit other parts of B.C.’s housing market in the short term, considering B.C home-sellers are dominating the market.
Bryan Yu, a senior economist reported that foreign buyers announced by the provincial government in July and rolled out on August 2nd will temporarily slow sales in Metro Vancouver by about 10%
He added that the 15% tax imposed upon foreign investors puts downward pressure on a market that was already beginning to slow after a blistering start to the year.
“The foreign buyer tax will result in a temporary but substantial short-term cut in Metro Vancouver sales trend … the tax puts further downward sales pressure on a market already slowing from spring fever,” said Yu
The annual median price in Metro Vancouver increased by 20% this year to $705,000 dollars compared to a year ago.
Slower growth is healthier for the market because sky-rocketing prices in the Greater Vancouver, Yu said.
“It’s too soon to conclude how the real estate market has responded to the additional tax. … As time goes on, we will have a better sense of how the market responds to the additional tax and to assess the effect of the tax. The intent is to slow the rate of price growth and cool demand while Metro Vancouver’s housing market responds by building new homes to meet local needs,’’ said the Ministry of Finance in a press conference.