Here are the latest real estate market statistics from Macdonald Realty on the Greater Vancouver listings and sales in August 2018.
In the Vancouver Westside, there were 59 sales of detached homes and 821 active listings at the end of the month. The benchmark sale price was $3,278,500, with average days on market of 66. The hottest markets for sales was Kitsilano with 11 sales.
In comparison, the condo market had 276 sales, 1,139 active listings and a benchmark sale price of $825,000 with an average of 30 days on market. The hottest market for sales was Downtown VW, 66. sales.
Townhome sales were 33, active listings were 203. The benchmark sale price was $1,267,800 with an average days on market of 43. Fairview VW with 8 sales was the hottest market of the month.
It’s a buyer’s market for townhouses and houses.
Vancouver’s luxury market, already experiencing a downturn since 2016, will likely take another hit with the introduction of higher tax rates for foreign and luxury home buyers, experts say.
The provincial government of British Columbia on Tuesday announced a basket of measures as part of its 2018 budget; among them was a hike, effective immediately, on property transfer taxes for foreign buyers and buyers of $3-million-plus homes (US$2.36 million and above).
Starting Wednesday, tax rates for foreign buyers were raised to 20% from 15%, while all C$3-million-plus home purchasers must now pay 5%, instead of the current 3% property transfer tax.
Not only will these taxes be applied to homes in Metro Vancouver, but they’ll also be levied in the Capital Regional District, the Fraser Valley, the Central Okanagan and the Nanaimo Regional District.
The new 15% property purchase tax (the “PTT”) explained.
WHAT IS THE NEW TAX?
It is a property transfer tax of 15% payable by “foreign” buyers IN ADDITION TO the regular property transfer tax at the time a property transfer for residential property is registered in the land title office for properties located in “The Greater Vancouver Regional District” (the “GVRD”). This includes places like Surrey, Richmond, Delta, West Vancouver, Coquitlam, etc. but not Squamish, Whistler, Abbotsford, Vancouver Island, the Okanagan, etc.
So if a foreign buyer buys a $7 million residential property in West Vancouver the total property purchase tax would be:
WHO HAS TO PAY?
The tax has to be paid by “foreign entities”. That means foreign citizens, foreign companies and taxable trustees. Canadian citizens and Canadian permanent residents do not have to pay. Foreign corporations include companies set up outside Canada and Canadian companies that are controlled by foreign persons or by foreign companies.
WHAT SORT OF TRANSACTIONS ARE SUBJECT TO THIS TAX?
The tax is payable in respect of residential properties in the GVRD purchased by foreign buyers on or after August 2, 2016 at the time the transfer is registered in the land title office. It is payable even when the contract was finalized before August 2, 2016 and the parties unaware there would be a new tax.
ARE THERE ANY LOOPHOLES?
Not many. Non-residential property is not subject to the extra tax nor are properties outside the GVRD. Real estate investment trusts and mutual fund trusts are not subject to the extra tax. Penalties of $100,000 for individuals and $200,000 for corporations apply to anyone who participates in illegal tax avoidance. Presumably this includes lawyers, accountants and realtors who assist in illegal tax avoidance.
Written by Peter Scarrow, former immigration lawyer, currently is the Director of Asian Business at Macdonald Real Estate Group.
Currently, the real estate industry is in the middle of its usual summer slowdown. — Image Credit: Phil Melnychuk/THE NEWS
Slapping another 15-per-cent sales tax on homes to foreign buyers could cool the red-hot real estate market in higher priced areas of Richmond or Vancouver, but it might take longer to learn of any effect in Maple Ridge and Pitt Meadows.
The announcement by the B.C. government last week saw a rush to complete deals by the Aug. 2 deadline, but Tom Garvey, managing broker with Macdonald Realty, says it will be at least a month before the full effect of the tax is known in Maple Ridge.
“There’s not a huge amount of foreign buyers who are coming out to Maple Ridge,” said Garvey, who said he hasn’t noticed any effect so far in the local market.
But it’s early yet and time will tell.
“Let’s see what happens over the next two to four weeks.”
Greater Vancouver’s real estate market is in the throes of chaos as buyers, sellers and industry insiders try to adapt to a new tax on foreign buyers that went into effect on Tuesday.
Though a recent poll showed nine out of 10 British Columbians back a tax on foreign buyers of residential real estate, many industry insiders and entrepreneurs are lining up against it, saying it risks destabilizing the housing market and Vancouver’s economy.
The tax has even taken on shades of a political controversy, as a prominent Vancouver real estate marketer and provincial Liberal fundraising chief denies he knew in advance the tax was coming.
Vancouver realtor Steve Saretsky told Global News his analysis of MLS data found that detached home sales collapsed by 75 per cent in the few weeks after the provincial government announced it was introducing a 15-per-cent sales tax on foreign buyers of residential real estate in Greater Vancouver.
Saretsky described the market as being in “absolute mayhem.” But other realtors told media it is too soon to tell what the precise impact will be on the housing market.