Foreigners sharply curb Vancouver home purchases in wake of tax

Foreigner buyers sharply scaled back Vancouver-area property purchases in September after British Columbia introduced a tax on international investors aimed at cooling the city's housing market, data from the Canadian province showed on Friday. Overseas investors made up 1.8 percent of home sales in September in Metro Vancouver, according to data from the province's finance ministry. That was slightly higher than 0.9 percent in August but well down from the 13.2 percent between June 10 and August 1, the period before the tax took effect.
British Columbia introduced the 15 percent foreign property transfer tax effective August 2 in an effort to improve affordability in Canada's most expensive property market. The provincial government acted after many residents and housing advocates complained that foreign buyers, especially from China, were driving up prices and making homes unaffordable for local people. Critics of the tax have said it is unfair to existing property owners and will hurt the economy.
The provincial data out Friday showed the total value of property transfers in the Vancouver area involving foreign buyers was C$79 million ($59 million), compared with C$2.3 billion between June 10-August 1. There have been a number of cases involving foreign buyers purchasing a percentage of a property and a Canadian citizen or permanent resident purchasing the other portion, the government said.
It added that since the tax was introduced, it received 166 additional property transfer tax returns. As part of its compliance process, 85 audit files have been opened to investigate if additional taxes should have been paid. Data out earlier this month showed overall Vancouver-area home sales fell 32.6 percent on a year-to-year basis in September in the wake of the tax.
According to Vancouver real estate agent Tom Gradecak, detached home sales on Vancouver's affluent westside are down more than 50 percent in August and September compared with a year ago. He added that buyers and sellers appear to be at a standstill. "The sellers realize they missed the peak, so they're waiting," he told Reuters late last week. "The buyers, they're out there, but they're looking for a good deal."