Since its introduction in July, the Foreign Buyers Tax has dominated headlines across the province. In an effort to cool Vancouver’s escalating market, Premier Christie Clark brought in the 15% property transfer tax on foreign buyers in Metro Vancouver. This means non-Canadian residents would have to pay an additional $300,000 if they purchased a $2 million property.
According to recent reports, the tax is working. The total value of purchases by foreigners dropped to $17 million for the month of August -- a major decrease from the $2.1 billion over the previous six weeks.
At a recent NAIOP Breakfast Event, we asked our panelists how they felt the tax would affect the future of foreign ownership in Vancouver.
Vice President, Executive Director, Investment Sales & Capital Market at Cushman & Wakefield
“The market needed to be cooled but maybe the tax was too heavy handed – you don't want to cut butter with a chainsaw. The [Foreign Buyers] tax has caused the market to pause, and I think it just normalized the market. Year over year, we were experiencing increases in the market that just didn’t make sense. Since the tax, it’s been back to business as usual. In terms of the commercial market, it’s almost had zero effect.
We’ve recently had complete sell-outs in our Vancouver and Burnaby projects, which were completed even after the tax was in placed. This tax will have no impact on the condo and commercial market, and just slowed down million dollar single homes.”
Senior Vice President, Head of Transactions, Western U.S. Bentall Kennedy U.S.
“If the intent is to slow down fire breathing market, I wonder if it will have the opposite effect?
Compared to San Francisco, Vancouver’s taxes are on par. What I’ve learned is that taxes don’t drive value.”
Foreseeing little impact on Vancouver’s real estate market is a view shared by others as well. In a Globe and Mail article, reporter Gary Mason shared that offshore investment from China will continue to put their money into cities that have introduced a similar tax, like Australia.
“Simply put, the Chinese feel comfortable here and consequently will continue to buy property here.”
What do you think? Tweet @naiopvancouver and let us know!