New data show that foreign citizens are edging back into Metro Vancouver's flagging real estate market months after the province put a 15-per-cent tax on these buyers.
In and around Vancouver, foreign citizens were involved in 4.1 per cent of all homes bought in November, up from 3 per cent the month before and more than quadruple the near-zero rate recorded in the month after the province launched the levy at the start of August.
But the percentage of buyers who are not Canadians or permanent residents is still well below the double-digit rates seen in Metro Vancouver before the new tax hit the sector, which was already showing signs of cooling off.
"It's still too early to draw any real conclusions from the data about the long-term effect of the additional property transfer tax," a finance ministry statement said. "The purpose of the additional property transfer tax is to help manage demand in Metro Vancouver's residential real estate market, to allow the housing market to respond by building new homes to meet local needs."
Gauging the ripple effects of the foreign buyer tax in the months ahead could be difficult as federal measures continue to cool Canada's housing markets. Those include stress-testing a wider range of mortgages, which would make it more difficult for some borrowers to be approved, and closing loopholes that some foreign buyers have used to avoid paying capital gains taxes.
In November, the province gained an extra $24-million from the new tax on international buyers, and another $152-million from the property transfer taxes related to all home sales, according to new data the B.C. finance ministry released on Friday. To date, the new levy has brought in more than $48-million, which the ministry statement said all goes toward funding housing affordability measures.
Those figures still pale in comparison to the $273-million B.C. took in from homes changing hands in June, which is when overall sales had already plateaued
After the market nearly froze in August, foreign activity has remained highest in the two Vancouver suburbs where, in the month and a half before the tax, almost one in four properties went to international buyers.
Government data show that in Burnaby and Richmond, almost nine per cent of all homes bought in November went to international buyers. That continues a rebound from October, when the rate was 6.7 per cent or lower in both cities.
In Vancouver, only 4.4 per cent of buyers were foreign in November, compared to 15 per cent in the month and a half before the tax. In Vancouver and Richmond, but not Burnaby, foreign buyers bought more expensive homes compared to locals, the data show.
Meanwhile, sales to international buyers in and around Victoria – where the tax does not apply – dropped slightly in November to 4.6 per cent of all residential transactions after they hit more than 6 per cent in October and accounted for about 10 per cent of the value of all property sold.
Realtors, economists and industry insiders have also said international money could shift east to Kelowna and Toronto, but data are unavailable because B.C. does not separate the statistics for that city and Ontario does not track foreign ownership.
The housing market is expected to play a prominent role in the upcoming provincial election campaign.