Foreigners wanting to buy in Vancouver will need to add 15% to the purchase price.. Put another way, this adds $150,000 to the purchase price of a $1,000,000 property.
The new tax begins August 2nd. The provincial BC govt says they want to ensure that home ownership remains within the reach of the middle class. And if it doesn’t then, they say, it has created a new revenue stream.
A few things could happen:
- Foreign buyers will think twice before buying in Vancouver. Who wants to pay 15% above market price?
- It will also push these investors to another world class city in Canada… Toronto.
- Ontario will have no choice but to introduce a foreign buyer tax in Toronto.
- Lower sales activity in Vancouver and Toronto means less chance of house prices increasing.
- Other markets outside GTA and Vancouver will benefit with foreign investors.
Toronto and Vancouver real estate prices have skyrocketed over the past 10 years. However, Canada is still seen as a stable and safe place to invest for foreigners around the world. Add to this, the record low mortgage rates (they just keep getting lower somehow) and you have the old ‘supply and demand’ mechanisms kicking in.
YES, I think Toronto will be hit with a foreign property tax if Vancouver buyers start coming here. It could take 6 months or longer.. but I think this could happen.
Real estate activity will slow down a little in these cities.. but will foreigners just disappear? I don’t think so. Look for these buyers to shop outside the GTA and greater Vancouver area. There are several other markets that could benefit from an influx of foreign buyers. Time will tell.
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Steve Garganis 416 224 0114 email@example.com