The president of Sotheby's International Realty Canada says the B.C. government's tax on foreign buyers has put a damper on the housing market in the Vancouver region, but Sotheby's is optimistic about a new partnership with a leading online property-listing service that targets purchasers in China.
"Our belief is we should be helping buyers and sellers of real estate on a global basis to unite the people who want to buy and sell homes," Brad Henderson said in an interview.
Sotheby's in Canada is part of a global network that signed a strategic partnership recently with Juwai.com, allowing listings worldwide from Sotheby's to be automatically uploaded to the property portal in China.
"When we're engaged by a seller, their expectation is that we're going to expose their property to the broadest audience possible because that is going to ensure that more buyers have the opportunity to see the property," Mr. Henderson said.
The latest batch of B.C. government statistics adds more evidence to suggest the 15-per-cent provincial tax on foreign buyers in Metro Vancouver that took effect on Aug. 2 is having a significant effect to reduce the level of non-Canadian purchases in the market.
In the seven weeks leading up to the tax's implementation, foreign buyers accounted for 13.2 per cent of the region's total, according to the B.C. government's data based on land title registrations. During the two-month period after the tax was introduced, foreign purchasers accounted for only 1.3 per cent of the total number of deals closed and registered in Metro Vancouver.
Mr. Henderson said the B.C. government's intervention came at a time when the housing market in the Vancouver region already was cooling off. "You're trying to tinker with a market that is very complicated and very sophisticated and has a large number of players," he said. "To say to somebody who owns a piece of real estate that they're going to have to sell to a local buyer and not sell potentially at a higher price to someone else is, in my opinion, meddling."
Sales volume began sliding after peaking in March, and average prices in many neighbourhoods have been decreasing from record highs earlier this year, industry observers say. "In April, the interest in real estate in Vancouver was slowing down. That was primarily from price exhaustion – in other words, people were getting anxious about the seemingly never-ending price increases in real estate," Mr. Henderson said. "Certainly, the introduction of the 15-per-cent tax caught the market by surprise. What we're finding is that the market pauses, or freezes perhaps might be better term."
It is too early to tell whether the tax on foreign buyers will have a long-lasting impact in scaring away foreign buyers or whether some of that demand might return, Mr. Henderson said.
Ross Kay, founder of Ross Kay Realty Consultants, said the partnership between Sotheby's and Juwai.com is focused on catering to the needs of sellers. "They're strategically using this promotional strategy for sellers. It's a marketing ploy to try to get listings," Mr. Kay said. "You have a legal obligation when you're representing sellers to get them the highest price possible."
The industry's benchmark price, which depicts the sale of typical properties, reached a record high of $1.58-million in September for detached houses sold within the boundaries covered by the Real Estate Board of Greater Vancouver.
But Mr. Kay calculates an average purchase price in the broader area known as Metro Vancouver. The price for detached properties sold in Metro Vancouver in September averaged $1.36-million, up 12 per cent from same month in 2015 but down 12.6 per cent from the peak of $1.55-million in April.
Matthew Moore, president of the Americas for Juwai.com, said inquiries to his firm about Vancouver from prospective buyers in China fell 40 per cent in September from the same month in 2015, though that is a much slower rate of decline year-over-year than in August. Inquiries about the Toronto market have spiked.
"Many Chinese buyers feel that Vancouver has become overpriced and lacks good inventory," Mr. Moore said in a statement. "We know that Vancouver for the long term will remain appealing to international buyers."