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Foreign home buyers rushed to buy before new B.C. tax

Foreign home buyers scrambled to avoid paying a new 15 per cent tax in the days before an Aug. 2 deadline, according to numbers released Thursday by the B.C. government.
Premier Christy Clark: "The impact we wanted."

Foreign home buyers scrambled to avoid paying a new 15 per cent tax in the days before an Aug. 2 deadline, according to numbers released Thursday by the B.C. government.

The numbers also showed that the rush slowed to a trickle after the tax deadline, prompting B.C. Premier Christy Clark to suggest her government was responsible for reining in the province’s scorching real estate market.

“It’s fair to say we may have had an impact,” said Clark at a news conference in Kelowna. “That was the impact we wanted to have.”

Clark said the government imposed the tax on foreign buyers for Metro Vancouver homes in August in an effort to cool down escalating prices. She said the tax was also intended to give B.C. residents a “crack at housing.”

Data in a Finance Ministry statement showed that on July 29 — the last business day before property transactions could be registered before the tax took effect — 55 per cent of all residential property deals in Metro Vancouver involved foreign nationals.

The statement said more than $850 million worth of property transactions involving foreign nationals in Metro Vancouver were registered at the land titles office on July 29.

The ministry numbers also showed declines in real estate transactions involving foreign nationals since the introduction of the tax.

The figures indicate 1,974 property deals in Metro Vancouver involving foreign buyers from June 10 to Aug. 1, but that number dipped to just 60 property transactions involving foreign buyers from Aug. 2 to Aug 31.

The total value of property transfers involving foreign nationals in Metro Vancouver from June 10 to Aug. 1 was $2.3 billion. The value dropped to $46.8 million from Aug. 2 to Aug. 3.

“While it will take more time to conclude what effect the additional property transfer tax on foreign buyers has had on the real estate market, the collection of real estate transaction data is allowing the province to monitor any changes in the market,” said the ministry statement.

The tax, for example, adds $300,000 for foreign buyers on a $2-million house purchase.

Currently, all home buyers in the province have to pay a one per cent tax on the first $200,000 of their purchase, two per cent on the remaining value up to $2 million, and three per cent on the portion above that.

The Real Estate Board of Greater Vancouver said in June that its benchmark price for detached properties in Vancouver had risen above $1.5 million.

A Conference Board of Canada real estate report Thursday found property transactions dropped in 17 of 28 markets in Canada between July and August, with the largest declines in Vancouver and the Fraser Valley.

The province said there were 45 Greater Victoria transactions worth $38 million in August that involved foreign nationals.

From June 10 to Aug. 1, before the Metro Vancouver 15 per cent tax came into effect, there were 90 property transfers worth

$63 million that involved foreign nationals.

The province has just started to collect data on sales to foreign buyers, and does not have figures for all of June.

Mike Nugent, president of the Victoria Real Estate Board, said while a drop in foreign sales in Vancouver was to be expected as a result of the tax, it’s difficult to draw conclusions with regard to Victoria. The information available is a small sample size and the two periods cover different lengths of time. “Overall, we do expect a slower market in August than in July, and we see that in our market statistics,” he said.

In Greater Victoria, there was a total of 1,214 property transfers in August worth $739 million, a drop from the 2,280 transfers worth $1.3 billion in the previous 51-day period.