The British Columbia’s Liberal government last year introduced a 15% tax on all foreign buyers in the Vancouver housing market to put the high housing prices under control. The tax which had little effect during the third quarter begun to run its course through the fourth quarter when home prices in the city declined significantly.
Furthermore, foreign buyer’s participation in the market also dropped. This for the Liberal government was good news as the tax had its intended effect and plans are being made to implement the tax in the suburbs east and north of Vancouver and Victoria where home prices are also gradually rising.
Housing affordability is going to be one of the main topics during the forthcoming provincial elections, yet the new budget announced on Tuesday by the government indicated nothing new for home buyers to look up to in terms of home affordability.
According to Finance Minister Mike de Jong, the tax imposed on foreign buyers had a positive effect in Vancouver but the government is keeping an eye of the effects of the tax on other nearby markets. However, the government has more work to be done in addressing home prices and Jong noted, that the government had not put in enough efforts to tackle the supply end of the market which many speculate is affecting home price.
Foreign investor’s involvement in Vancouver declined from 13% to 4% in December. The budget also explained the proceeds from the property-transfer tax will drop to $1.5 billion next fiscal year, with foreign investors accounting for $15 million billion of the decline.
The property-transfer tax for this year is expected to bring in $2 million which will be more than the $1.8 million in total direct proceeds expected from the province’s main resource sectors.
The only new measure in terms of real estate announced in the budget was an increase in the entry amount on a property-transfer tax exemption for first-time buyers from $475,000 to $500,000.