You know that BC referendum where 54 per cent voted against the HST, effectively killing the controversial tax? If you don’t then you should pick up a newspaper more often, but even those of you in the current events loop might not realize the effect that the repeal of the HST could have on home purchases on the West Coast.
According to Central 1 Credit Union, a BC-based financial services institution, the removal of the HST and the return of the provincial sales tax mixed with the GST will cause some homebuyers to delay purchases until 2013, leading to a decline in 2011 home sales.
“People looking at new homes priced over $525,000 may very well wait until the tax changes lower the 12 per cent hit they face,” explained Bryan Yu, the credit union’s economist in a news release.
The credit union predicts that home sales in BC will have declined less that 1 per cent from their 2010 mark by the end of the year. Total homes sales are expected to reach 88,200 units by the end of this year. The biggest drop will be in the sales of new homes, which will decline by 26 per cent.
At the same time, resales of homes are expected to rise 4.7 per cent over last year’s figure and the median price of homes in the province is expected to rise 6.8 per cent to $417,000.
Yu also indicated that he doesn’t see a dramatic price drop in the Vancouver housing market’s future.
“Our research shows few signs that speculators are overly active in the Vancouver market, which means we are unlikely to see a speculation-induced bust,” he said.
An optimistic conclusion to mixed housing market news…