Vancouver Foreign Buying Activity Slowed Dramatically After Property Transfer Tax

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VICTORIA — Property purchase figures released Thursday by British Columbia's government reveals a stampede of foreign home buyers scrambling to avoid paying an additional 15 per cent a tax in the days before the Aug. 2 deadline.

The numbers also revealed that the rush slowed to a trickle after the tax deadline, prompting B.C. Premier Christy Clark to suggest her government was responsible for reining in the province's scorching real estate market.

"It's fair to say we may have had an impact,'' said Clark at a news conference in Kelowna. "That was the impact we wanted to have.''

vancouver home
A home for sale in Vancouver. (Photo: Jonathan Hayward/CP)

Clark said the government imposed the tax on foreign buyers for Metro Vancouver homes in August in an effort to cool down escalating prices. She said the tax was also intended to give British Columbian residents a "crack at housing.''

Data in a Finance Ministry statement revealed on July 29 — the last business day before property transactions could be registered before the tax took effect — that 55 per cent of all residential property deals in Metro Vancouver involved foreign nationals.

The statement said more than $850 million worth of property transactions involving foreign nationals in Metro Vancouver were registered at the land titles office on July 29.

But the ministry numbers also showed declines in real estate transactions involving foreign nationals since the introduction of the tax.

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A sold home in Vancouver. (Photo: Jonathan Hayward/CP)

The figures indicate 1,974 property deals in Metro Vancouver involving foreign buyers from June 10 to Aug. 1, but that number dips to just 60 property transactions involving foreign buyers from Aug. 2 to Aug 31.

The total value of property transfers involving foreign nationals in Metro Vancouver during the June 10 to Aug. 1 period was valued at $2.3 billion, the ministry statement said. The value dropped to $46.8 million from Aug. 2 to Aug. 31, the ministry numbers show.

"While it will take more time to conclude what effect the additional property transfer tax on foreign buyers has had on the real estate market, the collection of real estate transaction data is allowing the province to monitor any changes in the market,'' said the ministry statement.

The tax adds $300,000 for foreign buyers on a $2-million purchase of a home.

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B.C. Finance Minister Mike de Jong and Premier Christy Clark announce a 15 per cent property transfer tax on foreign buyers in July. (Photo: B.C. government Flickr)

Currently, all home buyers in the province have to pay a one-per-cent tax on the first $200,000 of their purchase, two per cent on the remaining value up to $2 million, and three per cent on the portion above that.

The Real Estate Board of Greater Vancouver said in June that its benchmark price for detached properties in Vancouver had risen above $1.5 million.

A Conference Board of Canada real estate report released Thursday found property transactions dropped in 17 of 28 markets in Canada between July and August, with the largest declines in Vancouver and the Fraser Valley.

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