Foreign home buyers accounted for 5 per cent of the homes bought in and around Vancouver in September, the highest rate since a tax on foreign purchasers was brought in little more than a year ago.
Statistics released Tuesday afternoon by the province show the percentage of buyers who were not citizens or permanent residents had climbed in September from the 3 per cent to 4 per cent observed in the year since the 15-per-cent levy was introduced on Aug. 2, 2016. Before that tax, brought in by the former, Liberal government, such buyers accounted for 13 per cent of purchases in the 22 communities affected by the levy.
Foreign participation remained highest in the Vancouver suburbs of Richmond and Burnaby – at 10.8 per cent and 9.6 per cent, respectively. In and around Victoria, where the tax does not apply, 5.1 per cent of all homes sold in September went to foreign buyers.
Finance Minister Carole James said on Tuesday in an e-mailed statement that she is concerned by the role foreign speculators are playing in B.C.'s real estate market and that her government is committed to overhauling its housing strategy in the spring budget.
"I'm looking at the foreign buyer tax as part of the comprehensive housing strategy," the statement said. "All options are on the table as we look at the impact the tax has had on the housing market."
From the introduction of the tax until May 31 of this year, 1,355 foreign buyers paid the levy, according to the province's July 14 filing. The tax brought in $131-million in extra revenue during that period and saw buyers paying an average of $96,870. The highest amount for one transaction was $2.3-million, the government's filing said.
B.C.'s NDP government is still defending the tax against a proposed class-action lawsuit, even though the party criticized the levy while in opposition and has declined to say what it plans to do with it – strengthen enforcement, broaden the tax's reach or kill it entirely.
This summer, Attorney-General David Eby said his department would continue fighting a proposed lawsuit filed last fall by a Chinese citizen who moved to Canada in 2013 and was forced to pay an extra $83,850 when she bought a townhouse in Langley, B.C.
This year, the Ontario government introduced a similar tax for foreign buyers in an effort to calm the Toronto market.
Before the B.C. tax took effect, foreign activity was estimated to account for about 10 per cent of sales in the Vancouver region. Afterward, the percentage dropped to almost zero before increasing to about 3 per cent before September.
Since the start of this summer, prices for condos and townhouses have recovered and set records every month, although the average price of a detached home – at $1.67-million – was lower than the $1.76-million seen in July, 2016.
Andy Yan, director of Simon Fraser University's City Program, said the data suggest the 15-per-cent levy may just be the cost of doing business for foreign investors interested in Metro Vancouver's simmering residential real-estate market.
"It also suggests that there is an issue and an opportunity to revisit [the tax] and tune it to a more direct and robust policy response," said Mr. Yan, who studies the region's census data on housing vacancies.
Last week, former finance minister Mike de Jong criticized the government because it had stopped posting the foreign-buyer numbers.
On Tuesday, he said the new numbers tell him the bulk of the demand putting pressure on the market is domestic.
"There's a market, and I think the industry wants to act. It's the job of government to facilitate the levels of investment that builders want to make to construct more homes for families who want to buy them. It's not rocket science," Mr. de Jong said.
He said the pressure on prices will continue as long as demand outstrips supply. "It's when governments allow for the market to adjust to the demand that is there that that pressure will come off."
He said government has a role in developing lower-income housing, but it also faces pressure to help middle-income families who can't find homes because they are not being built fast enough. "In order for a home to be affordable, it must be available," he said.
Mike Hager
Ian Bailey