I’m sure that you have heard the news. The BC gov is now charging foreign buyers an additional 15% property Transfer tax.
How does this impact the Vancouver Market? Will we see prices fall as a result?
The answer to both of these questions is yes but it will take 3 to 5 months for it to play out. The first thing that will happen is prices fall. I believe we will see this happen in the high end market, mostly in the single family market in areas like West Vancouver, the Vancouver Westside and East Vancouver. This would have happened regardless of the 15% tax because demand was decreasing and supply was increasing in these markets before the tax was even introduced.
The East Vancouver Single Family market we have seen inventory (i.e. number of listed homes in a given month) increase every month for the last 6 months. In the Vancouver Westside single family market the number of homes sold in a given month is down 20% from 3 months ago. Both these scenarios will also put downward pressure on prices. The silver lining for individuals looking to sell a single family home in these neighbourhoods is that land cannot be created out of thin air and generally there is still an undersupply of housing in the single family market.
Bob Rennie related this 15% tax to when the GST was first introduced. It took 6 months for people to get used to paying GST and then it was accepted and the market returned. The same thing will happen with the new tax on foreign buyers. People will adapt and accept it.
We have all heard the saying that where there is uncertainty, there is opportunity. For you buyers out there, now is the time to get off of the fence. You will no longer be competing with other buyers and have more time to make a decision on your purchase. For you sellers it is time to sharpen your pencils and make sure that you are priced accurately, maybe consider pricing a little bit lower than the last sale to get under the market and catch it while it dips. Or if you don’t have to sell wait it out for a few months for things to settle down.