Foreign Tax Impact: Still Too Early to Tell

While house sales for August dropped by 22.8 percent since July, the Real Estate Board of Greater Vancouver’s general consensus is that it is too early to say what long-term impact the new foreign buyer tax will have on Vancouver’s housing market.

Sales have been declining moderately since February. While it appears that the foreign-buyer tax has accelerated that decline, it will be at least a few more months before anyone can make a proper speculation.

The new tax, announced July 25th of this year, added an additional 15 percent tax onto transactions with foreign purchasers. The tax came into effect August 2nd – causing a ripple effect of both purchasers rushing to close their purchases before August 2nd, and also stopping a number of agreed-upon deals from closing.

Home sales in the Metro Vancouver area do seem to have dropped for August, when compared to both previous years of the same month, and to July of this year. August sales totaled 2,489 sales, compared to 3,362 in August 2015 – a 26 percent decline!  The decline was far greater this year, than in the previous comparisons. Sales were down only 10.2 percent from August 2014, and only 1 percent from August 2013. Pricing, on the other hand, has increased by 31.4 percent compared to one year ago. The average price for August was a whopping $933,100, up from July’s $930,400 average price.

Detached home sales, however, plummeted in August with only a total of 715 deatched houses changing owners – a decrease of 44.6 percent in detached home sales for this August when compared to August 2015. The price of these detached homes has increased by 35.8 percent from 2015, to an average price of $1,577,300.

Has this tax affected you? Positively or negatively? Let us know in the comments.