Does the 15% tax on foreign home buyers in Metro Vancouver look like it will work?
Not according to one real estate specialist: Tina Mak of the Vancouver Chapter of the Asian Real Estate Association of America. The short article is well worth a read for some nuanced description of the Chinese real estate investor.
Excerpt from WesternInvestor.com:
However, Vancouver is what in the real estate trade we call a “Super Prime City.” Others in this category include Tokyo, Shanghai, Hong Kong, Singapore, London, Paris, Monaco, San Francisco, New York and Los Angeles. These cities attract high-net-worth people who want to establish a residence. They also are places where they have confidence that their investment is safe and secure. Why else do they continue to flock to these locations? There are several key reasons: the brand of the city; its reputation for safety and rule of law; world-class services and easy access to amenities; quality of life and lifestyle; and, finally, the prospect of capital appreciation.
So, do I believe a 15 per cent tax will stop Asians, and particularly Chinese, from investing in Metro Vancouver? Absolutely not.
How would the “success” of this political sop be measured? Remember, you can’t expect a simple little buyers’ fee to solve all the world’s problems. The point of this fee was not to produce any results outside of showing certain vocal ridings in Vancouver that the provincial Liberals feel their pain. In that sense, has it worked? Absolutely.
The evidence shows that the 15% worked and that the writer of the article is wrong. Foreign money has moved to Victoria and commercial real estate in Lower Mainland, away from residential. House prices have dropped as the 15% tax did have its intended result.
The Trudeau Liberals need to step up and enact restrictions on foreign ownership of residential properties. What they’ve done to date on housing merely makes it harder for working Canadians to obtain a home.
I think we should not restrict it. We ought to MONETIZE it better, for example through higher property taxes, say triple.
The US indirectly does it by allowing you to deduct your mortgage interest and expenses such as property taxes from your US declared income. This essentially penalizes foreigners, including Canadians, who own property, say in AZ or FL. Unlike the US, in Canada we do not allow these deductions nor do we charge extra for foreigners (the once 15% upfront fee recently introduced in MetroVan being the exception) giving foreign owners a free ride – widely exploited by folks that do not declare incomes here but whose spouses, parents or kids live here, absorbing free healthcare, free education, free ESL, free policing etc. yet buy real estate with low property taxes, no income taxes paid and no taxes paid on the $1M gain either !
We overtax income earners and undertax property owners. We ought to learn from the US, especially Texas where they have no state income tax but very high state consumption taxes (over 8%) and very high property taxes. We should do the same in BC, and give seniors a break.
So, encourage foreign ownership, but monetize it far far better !
As Thomas says, I’m not sure why the article is using the future tense, the changes happened months ago and the results are in, prices in Vancouver are falling at one of the fastest rates on record (described in the article as ‘steady’) with the losses concentrated in the high end areas that had seen the greatest percentage of offshore money, and alternatives (Seattle, Toronto, Victoria) are booming.
Vancouver is a nice place for rich people to park their money, but there are others, so why pay an extra 15% for no reason.
But say things turn around and the author is right – then the logical response is to raise the tax to 30%. After all, if people are willing and able to contribute unlimited amounts of money towards our tax obligations, why stop them. If money is no object, then surely they won’t object?
It will be interesting with the current economic downtown in Calgary and Alberta, how this plays out in local foreign ownership in residential and commercial properties.
Though one should be objective here, I will wager on a hunch, there is probably already certain slow acquisition very low-key, of purchases by foreign buyers. Over 1,000 new condo units are currently empty in Calgary. http://www.cbc.ca/news/canada/calgary/condo-market-real-estate-calgary-1.3935881 30% commercial building vacancy rate in Calgary at this time.
No, Calgary is not the same in terms of large and many areas of tighter living density for walkability and cycleabiility close to amenities, but it wouldn’t be surprising there might be people buying…more than 1 property at this time. We’re cheaper than Toronto, Victoria. A lot.
The Rocky Mountains, national parks are about 100 km. away from Calgary. Canmore is even closer…provided you don’t buy in a flood plain. All 1 hr.’s drive away (Equivalent to a daily Toronto work commute 1-way. I used to live /work there and stlll have family there).
It’s a big contrast to live in Calgary, where I personally know enough locals in their mid-20’s, who have full-time jobs (if they are lucky) and bought a home (condo or detached) within the past 4 years. On top of that, I know several folks in their mid-30’s who own several residential properties and rent out.
Different world than Vancouver or Toronto in terms of housing “affordability”. Issue of affordability exists as well as homelessness.
Her comments are based on numerous assumptions.
“Asians want to set down roots here. And that, very much, means buying property.”
So this implies that Asians are just allowed to move to Canada no questions asked? I didn’t know it was a given they would be granted citizenship so easily.
So far the foreign home investor/owner limelight has been on foreign Asian nationals. There are probably others flying under the radar and not saying a peep.
Asian-descent folks are “visible” in Canada That’s all.
Where in my post did I imply automatic approval for immigration? Nowhere.
Applicants get approved …even in several years. Most likely there were people approved a few months just before the Vancouver occupancy tax was rolled out, for empty homes owned by foreigners.
People are forgetting something here: Immigration applications for….folks worldwide wanting to live in Canada. Who knows Canada may be slightly edging up as a desired destination..given the incoming new-Prez in US.
Huh? What are you talking about
“Where in my post did I imply automatic approval for immigration? Nowhere.”
I’m commenting on the Chinese woman being interviewed in the article not you. If I was responding to your comment it would be indented