Nearly a year ago, the provincial government implemented an additional 15 per cent Property Transfer Tax (PTT) for residential real estate purchases by foreign buyers in the Metro Vancouver region.
BCREA's Economics Department conducted a thorough analysis of the impacts of this policy. The Association created a simulation for the Real Estate Board of Greater Vancouver (REBGV) region, showing where sales would have been if the foreign buyers' PTT had not been implemented.
The result? Over time, the impact has been minor. While total sales in the REBGV area fell 19 per cent in August 2016 and dipped below expected levels for several months, sales throughout 2017 have been on par with their expected levels had the tax not been in place.
However, the tax has impacted luxury homes, as many foreign buyers are looking for high-end properties. Sales of homes over $3 million ramped up in the first half of 2016, reaching 5 per cent of total Metro Vancouver sales in February. In August 2016, when the tax was implemented, that share fell to 3.6 per cent and continued to decline. However, like the rest of the market, sales of luxury homes returned to more normal levels in the first four months of 2017.
There has also been minimal leakage of foreign investment outside of the Metro Vancouver area. The regions of BC unaffected by this tax have seen relatively stable levels of foreign transactions over the past year. The Capital Regional District, which includes Victoria, experienced two months in which the share of foreign investment briefly spiked higher but, since August 2016, the share of foreign transactions has averaged just 5.2 per cent.
Copyright British Columbia Real Estate Association. Reprinted with permission.