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Overseas home purchases in Vancouver fall after new tax

Friday, September 23, 2016 - 07:44

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The share of homes purchased in British Columbia by foreign buyers decreased as of the end of August, data from the provincial government showed on Thursday, suggesting a new tax in the city of Vancouver was discouraging overseas buyers.

[OTTAWA] The share of homes purchased in British Columbia by foreign buyers decreased as of the end of August, data from the provincial government showed on Thursday, suggesting a new tax in the city of Vancouver was discouraging overseas buyers.

The share of property transfers in the province that involved foreign nationals stood at 5.8 per cent between early June and the end of August. That was down from 8.4 per cent between June 10 and Aug 1, the last data released by the government.

Foreign buyers made up 1.4 per cent of transactions between Aug 2 and 31, when a 15 per cent tax on foreign homebuying in Vancouver went into effect.

Foreign purchases in metro Vancouver made up just 0.9 per cent of purchases during the month of August.

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From June to the end of August, purchases by foreign buyers totalled 9.3 per cent in Vancouver, down from 13.2 per cent between June and the beginning of August.

A large number of transactions in Vancouver involving foreign nationals were completed on July 29, the last business day sales could be registered before the tax took effect, the report said.

The value of home sales involving foreign buyers dropped to C$46.9 million (S$48.4 million) during August from C$2.3 billion in slightly more than the seven weeks before the tax went into effect.

The tax was put in place to address issues of affordability for local residents after a rapid acceleration in home prices in Vancouver, partly due to buyers from abroad. Some have suggested that Toronto, where the market has also been exceptionally hot, should consider a similar move.

There were 60 home purchases in Vancouver that involved foreign nationals between Aug 2 and 31, the report said, which raised about C$2.5 million in additional tax revenue.

Some of these purchases included both foreign purchasers and a Canadian citizen or permanent resident on the title.

Auditors with British Columbia's finance department are reviewing these purchases to determine if any were designed to avoid the tax, the government said.

REUTERS

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