Foreign Sales Tax Not To Be Blamed For Cooling Of Housing Market

Looking at the two months of slow sales in Canada’s housing market which was once booming, a specialist claimed that the newly foreign buyers’ tax that was implemented is not the reason for the slump. An investor and mortgage broker residing in Vancouver, Peter Kinch said; “Here’s my prediction of what’s happening: There is almost a perfect storm converging where you have foreign buyers taking a step back at the same time Vancouverites would typically go on vacation in August. So the market should have an ebb and flow in August anyway. Which would be borne out by the September sales numbers. September sales numbers are in large part reflected in the activity that was happening in August. We local people go on holidays, so there is a slowdown normally.”

At the start of August, the tax for foreign buyers in Vancouver was laid down and fully came into effect, causing a great impact on the sales of homes in the lower mainland. The percentage of home sales decline by 26% over the years in that month, continuing into the next month (September), causing sales to do down by 36% over the years, with the month-over-month falling by 95%.

Foreigners are being very cautious of investing or putting their money into Vancouver’s real estate, and the housing sector might partially be the one to blame. Peter argued that the cycle of the sales will be regulated and bounce back by spring of 2017. “The year-over-year comparisons can get skewed and the problem is that will create a perception that the foreign buyers tax has an enormous impact when really that was a portion of people going on holidays.”