New housing tax could push foreign buyers to Victoria: experts
Published Monday, July 25, 2016 6:41PM PDT Last Updated Monday, July 25, 2016 6:42PM PDT
If Victoria’s real estate market wasn’t already attractive to foreign investors – it certainly is now.
That’s what some experts took away from Housing Minister Peter Fassbender’s Monday announcement that the province would levy a 15 per cent property transfer tax on foreign buyers in Metro Vancouver.
The tax’s mandate is to ease the Lower Mainland’s housing crisis and increase affordability, but some fear it may push Vancouver’s problem across the Strait of Georgia.
“If I were an overseas investor looking to part cash in British Columbia, all of a sudden today Victoria got 15 per cent cheaper than Vancouver relative to yesterday,” said UBC professor Tom Davidoff. “An interesting question is what is the impact on this tax in a place like Victoria?”
Statistics show Victoria’s foreign investment is moderate: just over two per cent of buyers during this year’s first quarter were foreign.
Victoria Mayor Lisa Helps said she’ll be watching closely to see if that number will spike with the new tax.
“I appreciate Minister Fassbender’s desire to pilot it in Vancouver, we’ll see what happens there,” said Helps. “If it’s effective then I think it should be piloted on the South Island, and if it’s so effective that it’s having a negative impact here, I think we need to take a look at that really quickly.”
A Victoria-based realtor who specializes in selling to foreign investors said the tax could actually have the opposite of its intended effect.
“If anything, I think it has the possibility of maybe making properties more expensive down the road,” Tony Joe said.
“Those in Vancouver who purchased their property and pay the 15 per cent tax, there’s a good likelihood that when they try to re-sell down the road, they’re going to try to recapture that as well and it just means a higher price.”
But Davidoff said if the tax makes Vancouver more affordable for locals, it could stop a mass mainland exodus to Vancouver Island – even trickling down to affect home prices here.
“Today’s announcement softens prices in Vancouver, locals looking to go to Vancouver Island don’t need to go as much as they would have before, and so that should take a little bit of price pressure off of Victoria.”
Many maligned the new tax Monday including Green Party Leader Andrew Weaver, who said he has lost faith in B.C.’s ability to solve its housing affordability crisis.
“We’re going to see affordability issues rise even more, and that’s now how you introduce legislation,” said Weaver, who called for the tax to be levied province-wide.
The government could extend the tax to other areas like Victoria if it sees fit, but hasn’t announced plans to do so.