Realtors question legality of new taxes as foreign buyers exit cooling Vancouver housing market giving locals hope
By: Drew Penner
Within real estate circles, the effect of new taxes aimed at foreign buyers cashing in on Vancouver’s superheated housing market has been palpable.
Shawn Anderson, a realtor with Engel & Völkers Vancouver, says the change has been a psychological one.
“We’ve started to really notice the slow-down in the higher end market,” he said, adding it started about two years ago. “It was a more natural slow-down.”
But the gradual impact primarily on the single family dwelling market that was encouraged by the 15 per cent foreign buyers tax has now spread across the board with the provincial budget released in February, he said.
Anderson says while multi-family units have continued to pick up steam, with prices rising 20-25 per cent, the top end of the housing market is virtually at a stand-still.
“They’re just not selling,” he said. “The market’s kind of confused.”
There’s been a lot of discussion about how the speculation tax introduced by the NDP this year, with some noting it doesn’t directly target true speculation, with others suggesting it doesn’t go far enough.
Realtors like Anderson say, in any event, it proves the government was more eager to score political points than to target the root of the problem.
“It’s not going to make things more affordable,” he said. “They’re not going to turn a $4 million house into an $800,000 house.”
From his standpoint, what the government has done is put the brakes on a lot of potential deals.
“You’ll see buyers that aren’t in a big hurry to buy,” he said. “Sellers are reluctant to lower their asking price.”
That’s not to say he’s against real estate reform. In fact, Anderson cheers the recent decision by the Real Estate Council of British Columbia to increase penalties for rule breakers.
He just doesn’t think the NDP did their homework before adding a supposed levy on speculation into the mix.
“They admitted to doing no modelling before implementing those taxes,” he said. “Just because you charge more tax doesn’t mean you’ll net more revenue.”
But some have begun to benefit from the market cooling-off.
Karen Nguyen isn’t exactly a fan of what she considers new “sneaky” tax burdens.
But in recent days the Vancouver real estate agent’s had the opportunity to get her local clients in to take a look at condominium pre-sales, when before they’d have been booked solid.
“Last year it was very difficult,” she said, adding over the past few weeks the ground beneath sellers’ feet has really begun to shake. “They definitely are panicking.”
As the deposit required to lock down a home has jumped to 20, 25 and now 30 per cent for foreign residents, she’s started to hear back from sellers who may have previously sold out available stock within a week. Now, they’re telling her she can check out any unit she wants.
“The market is closing down,” she said. “You don’t know what’s coming up next.”
She wonders if the province’s new taxes are even totally legal, or if they would be found discriminatory in a human rights tribunal decision.
And Nguyen predicts this investment will just disappear from Vancouver entirely if the province keeps upping taxes on the wealthy.
“It’s not that they don’t want to pay it,” she said of foreign buyers. “Maybe they don’t feel it’s fair.”