So after that nasty snow surprise, spring has arrived! As usual, we expect the real estate market to spring to life as well as the flowers. But this year the cumulative effects of government actions with taxes and tighter financing rules for residential real estate will begin to show their effects.
Budget Changes Relating to the Market
Much of the recent provincial budget relates to real estate in BC. Here are some of the highlights:
- Foreign Buyer Tax has been increased to 20% (from 15%) and expanded to include several areas of the province outside of Greater Vancouver (Fraser Valley, Capital Regional District, Nanaimo, and the Central Okanagan).
- Property Transfer Tax has been increased to 5% (from 3%) on properties sold for $3,000,000 or more.
- A new “School Tax” on properties valued above $3 million assessed value will start next year. The tax will be 0.2% on the value from $3 million to $4 million, and 0.4% on amounts over $4 million.
- A new “Speculation Tax” will be applied to properties where the owners do not pay income taxes in BC. This annual tax starts this year at 0.5% of the assessed value, rising to 2.0% next year. The tax will apply to the same regions as the Foreign Buyer Tax, but many details remain to be announced.
- The BC Home Owner Mortgage and Equity partnership program has been cancelled and will only accept applications to this program up to March 31, 2018.
If you need clarification on any of these changes and how they may affect your real estate plans, please give me a call and I’ll help you sort it out.
Luxury Properties Sales Flat
Most visibly, properties at the higher end (and especially those favoured by offshore buyers) will feel the change. This includes more expensive properties in general – detached houses, and homes closer to the urban core. These properties are experiencing a flattening or softening of prices, and noticeably fewer sales than a year ago.
Condo Market 7% Off
At the opposite end of the market, apartment prices are continuing to rise, although perhaps more slowly than before. The number of apartment sales in Greater Vancouver is lower by about 7% than the same month a year ago and that trend is echoed in North Vancouver. It is not clear if the general drop in sales is due to a change in demand, more stringent mortgage qualifying rules, limited supply, or a combination. We’ll see how long Vancouver East can buck the trend.
Variable February Market
We can say for sure that the market is experiencing a lot of variation in trends across property types, price points and sub-areas. If you are considering a purchase or sale it is important to call me for relevant stats and experience-based advice.
Statistics Source: Real Estate Board of Greater Vancouver