New BC property taxes announced last week may not be the answer to tackling the province’s housing affordability crisis, according to some BC real estate boards.
The NDP government unveiled its 2018 budget last Tuesday, which included a 30-point housing plan to create a fairer housing market as house prices continue to skyrocket, particularly in the Lower Mainland.
The comprehensive plan calls for an increase to Metro Vancouver’s foreign buyer tax, raising it from 15 to 20 per cent, and expanding the levy to the Fraser Valley, Central Okanagan and Nanaimo and Capital Regional Districts. A new speculation tax was also introduced, targeting foreign and domestic speculators who don’t pay provincial taxes.
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However, Victoria Real Estate Board President Kyle Kerr tells BuzzBuzzNews he’s unsure if these new levies are the right solution.
“Is this going to help housing affordability? Time will tell, but we don’t think so,” says Kerr.
The board president notes that foreign buyers currently account for only 4.5 per cent to 5 per cent of sales in Victoria. It’s a small percentage compared to Metro Vancouver, where 13 per cent of transactions involved foreign nationals prior to the tax implementation in August 2016.
Kerr argues that extending the tax to Victoria might cause a small, short-term slowdown in sales, particularly in the higher-end of the market, but overall it won’t have a significant impact on activity.
“I think in the end it is another revenue driver for the government. I think it might affect a small segment of the market, but I think in the long-run it’s not going to have a major impact,” says Kerr.
Fraser Valley Real Estate Board President Gopal Sahota says he’s unsure if extending the levy to the Valley will have a notable impact on activity, as foreign purchasers accounted for only 1.4 per cent of transactions in 2017.
In regards to the new speculation tax, both presidents agree that the levy could have a small impact on activity in their respective markets.
Kerr adds that this tax is most worrisome for homebuyers in other provinces, such as Alberta and Ontario, who have part-time property in BC, but now might be deterred from investing in the province.
“In Canada, that’s probably the tax that’s more concerning to other provinces because you have people who probably don’t see themselves as speculators who now might be taxed, and they’ll have to determine if that’s fair or not,” says Kerr.
The Victoria board president is also quick to add that creating these new levies is not the answer to creating a more affordable market.
“If you really want to help the average person on the street, you [have] got to make homes more affordable by reducing the tax burden that you put on people,” says Kerr.
For a long-term solution, both Kerr and Sahota agree that more supply is needed across the province.
“Demand [in the Fraser Valley] is outweighing supply right now in every product type, whether it’s single-family detached, condos or townhomes,” Sahota tells BuzzBuzzNews.
Included in BC’s housing plan is a $6 billion-plus investment in affordable housing over the next ten years.