British Columbia's high housing costs are on the government's radar as it prepares to table its budget next month, but Premier Christy Clark is ruling out luxury or speculation taxes to cool Vancouver's hot market.
Ms. Clark said Tuesday that housing-relief options are one of the top issues for her government, but she didn't provide details beyond acknowledging the widespread real estate concerns of many British Columbians.
"We're thinking of a whole range of things," Ms. Clark said at a Vancouver news conference. "You'll see more of it as we get closer to the [Feb. 16] budget."
She said the government is considering measures that improve housing-market options for first-time home buyers but also retain the value of homes for current owners.
Last fall, Finance Minister Mike de Jong said the government was reviewing current thresholds for property-purchase tax levels and adjusting the $475,000 property-purchase tax exemption for first-time home buyers as potential housing-relief measures.
"We are not interested in taking steps that will see a diminishment in people's equity, the value of their homes, but we are interested in facilitating entry into the housing market by young families, young British Columbians," he said at a financial update last September.
B.C.'s current property-purchase tax is charged at a rate of 1 per cent for the first $200,000 of the sale price and 2 per cent for the remainder of the market value. The property-purchase tax on a property valued at $250,000 is $3,000.
First-time B.C. home buyers are currently exempt from the property-purchase tax on homes valued up to $475,000.
Ms. Clark said two-thirds of the properties in B.C.'s Lower Mainland are valued at under $450,000. "But in the City of Vancouver – in particular, on the West Side – there is clearly an affordability problem," she said. "We want to make sure homes are affordable, particularly in the City of Vancouver."
Earlier this month, the government raised the provincial homeowner grant threshold to $1.2-million to ensure that 91 per cent of B.C. property owners were eligible for the $570 grant to be subtracted from their property taxes.
Vancouver Mayor Gregor Robertson said that wasn't enough and called for the government to take bold action in the form of luxury and speculation taxes to chill the market, in which average detached-home prices in some city neighbourhoods surpassed $2.5-million.
Ms. Clark said the province is wary of making moves that reduce the equity homeowners have accrued in their homes over the years. She suggested cities such as Vancouver look to reduce their development charges in an effort to cut house prices.
Central 1 Credit Union economist Bryan Yu said increasing first-time home-buyer property-tax exemptions above $475,000 and raising property-purchase-tax thresholds are incentives for home buyers and likely won't stop rising prices in Vancouver.
"In the back-drop to this is actually lower levels of inventory and quite low supply levels in the market," he said. "That's what's really driving this upward momentum in home prices."