By Gagandeep Ghuman
Published: Feb 7, 2017
BC Minister of Finance, Michael de Jong, has given an ambiguous response to Mayor Patricia Heintzman’s request to implement a 15 per real estate tax on foreign buyers in Squamish. In October last year, she wrote to the Minister asking the province bring Squamish within the gambit of the new foreign-buyers tax. “Our fear, and one that is very probable, if not inevitable, is that Squamish will become even more desirable to foreign homebuyers looking to avoid the tax and further compound the issue of affordable housing in Squamish,” she wrote in her letter.
Responding to her letter, Minister de Jong said government is continuing to monitor the impact of the new tax on the housing market and is prepared to make changes as required. Beyond that, he didn’t say whether the province will consider widening the scope of the new tax. “The additional tax was introduced in the GVRD in an attempt to reduce upward pressure on house prices in the region and allow time for housing supply to catch up,” he wrote. “The government is aware that that there have also been significant housing price increases in other areas of the province including Squamish. These price increases, as well as sales numbers, have moderated in September,” he said. It may be too early to map out what changes the tax has wrought in Vancouver, although data suggests the tax seemed to have its desired impact, at least if government figures are to be believed. Data released by the Ministry of Finance in January shows real estate transactions drop since the government introduced the tax. There were close to 15,000 transactions in a seven-week period before August when the tax was introduced. That number slumped to 4,700 in October. Similarly, government data shows there were 1,970 foreign buyers before the tax was introduced, but that number dropped to 60 in October, indicating the tax has had its desired impact, at least for now. Local real estate observer Carrie Chase says it would be a purely political decision to implement the tax in Squamish. She said there has been some slowing down of the market with houses on the market for slightly longer period of time in town, but that should not be seen as a ripple effect of the tax.
“I think the market was due for some cooling off, but we may see an increase in demand at the lower end of the market now that government has introduced interest free loans,” she said.
The Squamish market seems to be slowing off, if you just compare the last three months of 2016 to 2015. Houses are on the market for longer period of time and sales are low, data shows. In December, for example, only seven detached homes were sold compared to 17 homes in 2015. They were also on the market for a slightly longer period of time for the same time period. Realtor Ihor Zalubniak says the foreign buyers’ tax may impact the higher end of the market as people looking to sell their property in Vancouver to move to Squamish may delay their move if they don’t get the price they had hoped to get in the city. Vancouver and Squamish housing market is closely connected, he says, and changes in one will surely impact the other. Any government intervention with more taxes can only hurt the market, he adds. “We are a small market and vulnerable to changes in the real estate in the city. If the government decided to implement the tax in Squamish, it will have a ripple effect and it will crush our housing market,” he says.