The provincial government is taking steps to cool down the red-hot Vancouver real estate market. While the goal is an admirable one, the direction headed could serve to stoke the coals of the simmering housing market right here in Victoria.
Beginning this week, foreign buyers will now have to dig a little deeper in order to purchase property in Metro Vancouver following the introduction of a 15 per cent tax on out-of-country buyers.
For that run-of-the-mill $1-million Lower Mainland home, an international buyer will be forced to cough up an extra $150,000 in tax. That $5 million luxury home? That’s an extra $750,000. An additional six-figure tax hit is likely to get the attention of any investor and will likely deter many from making the leap into Vancouver’s housing market. This will almost certainly have an impact on Vancouver’s housing market, but with so many Canadian buyers also looking to get in the market, it’s unlikely that homes in Metro Vancouver will become any more affordable for the average family.
But with the new tax discouraging many foreign buyers from jumping into the Lower Mainland market, they will be looking for alternatives to park their investment. And they won’t have to look far to find the booming Greater Victoria market, which has already witnessed an influx in offshore investment.
The provincial government deserves credit for trying to get a handle on a problem before it spirals even more out of control. But the government’s work is far from over on the issue. The province must closely monitor the situation to determine if it is simply spilling over into other jurisdictions. While other regions of the province may not have seen the same level of offshore investment as the Lower Mainland, their residents deserve the same levels of protection.
While looking to address a Vancouver housing market that has become out of reach for most British Columbains, the provincial government must be careful it doesn’t worsen the affordability issue in other parts of the province.