The B.C. government's 15-per-cent tax on foreign buyers in the Vancouver region had barely been in place a week when realtors and industry groups lined up with anecdotal evidence that it was having a major impact.
Headlines quickly described a housing market in "free fall," in which deals were collapsing and demand in some areas had all but dried up. But there has been little concrete data to show what's actually been happening since the levy took effect on Aug. 2, adding an extra tax on home buyers who aren't citizens or permanent residents, or on corporations controlled by foreigners.
Sales figures are now slowly trickling in, and while it's still too early to say what impact the tax will have on the region's market over the long term, there are indications that things may be slowing down.
Slowing sales
To be clear, the Vancouver region's housing market has been showing signs of softening for months, even for the typically slow summer period. Year-over-year home sales – that is, the change in the sheer number of homes sold compared with the same period in 2015 – have been dropping steadily, particularly for detached homes. The decline appeared to accelerate in the first two weeks of August, when the number of sales plunged by 65.7 per cent compared with the same period last year. However, experts caution they can't say how much the foreign tax is to blame — if at all.
A different story for new listings
Despite the apparent drop of sales activity, the number of new listings in the two weeks after the tax's implementation was about the same as the previous two weeks. The figures immediately before and after the tax are both up sharply from a year earlier.
What foreign buyers pay
The new tax is added on to the property transfer tax, which is already charged on real estate deals in B.C. when the land title is transferred. The standard property transfer tax uses a complicated formula that applies different rates for different portions of the purchase price, while the additional tax for foreigners is a flat rate of 15 per cent.
Measuring foreign buyers
The B.C. government started collecting nationality data on all residential real estate transactions in early June. The most recent data released covered June 10 to July 14, when one in 10 transactions in Metro Vancouver involved foreign buyers.
