Finance Minister Carole James has taxed speculators and foreign buyers
Measures to curb B.C. housing prices are working—and bringing unintended consequences for the province
It’s been more than a year since the B.C. government introduced a spate of policies aimed at cooling the provincial housing market, among them an increase to the foreign buyer’s tax and a speculation and vacancy tax. These changes, combined with a nationwide mortgage stress test and strict Chinese capital controls, have poured a bucket of cold water on a once-sizzling property market.
As of March, home sales in B.C. had fallen 23 percent year-over-year, according to the Canadian Real Estate Association, making for the slowest March since 2013 and putting sales 54 percent off their peak in 2016. If Metro Vancouver—which posted the weakest April home sales since 2000—is a bellwether for the rest of the province, the market will continue to slow.
As a result, the drop in sales activity and the rise in listings across B.C. keep putting downward pressure on prices. In March, the average provincial sale price dipped 5 percent compared to the previous year, marking the 11th straight negative month, the longest losing streak since 2013.
The provincial government’s efforts to curb runaway housing prices are certainly warranted, but the recent slowdown will come with repercussions. New development projects are already struggling to attract buyers, so housing starts are about to hit the skids. This will mean more pink slips for those who work in construction, which employs about 9 percent of the provincial workforce, Statistics Canada reports.
Government coffers, long addicted to real estate–related revenue, will also feel the brunt of the housing slump. Property transfer tax makes up more than 4 percent of Victoria’s total annual take, having doubled its share over the past decade. Last year alone, property transfer tax reached a record high of more than $2 billion.
In other words, real estate runs this province, so no wonder nearly 5 million British Columbians are watching in awe as the property market tumbles into troubling territory. Whether you like it or not, whether you rent or own, we’re all in this together now.