The benchmark price for detached houses sold in September in Greater Vancouver hit a record $1.58-million. – 33.7 per cent higher than in September, 2015DARRYL DYCK/The Globe and Mail
The influence of foreign buyers on the Vancouver region's real estate market remains at levels far below what they were before the introduction of a new tax, with purchasers who are not Canadian citizens or permanent residents accounting for only 1.3 per cent of the total deals closed in August and September, according to the B.C. government.
The latest batch of government statistics adds more evidence to suggest the 15-per-cent tax on foreign buyers in Metro Vancouver that began on Aug. 2 is having a significant effect on the level of non-Canadian purchases in the market. In the seven weeks leading up to the tax's implementation, foreign purchasers accounted for 13.2 per cent of the region's total.
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From Aug. 2 to Sept. 30, there were 152 foreign home buyers out of a total of 12,114 closed deals registered regionally with the province's land title office, the B.C. Finance Ministry said on Friday as it released new data for September.
Of the total number of transactions, the proportion of foreign purchasers who closed their deals in Metro Vancouver was 1.8 per cent in September, compared with 0.9 per cent between Aug. 2 and Aug. 31. For August and September combined, the proportion of foreign buyers was one-10th of what it was in the seven weeks before the tax.
Economists say it will take at least another six months of B.C. data to gain a better picture of the changing role of non-Canadians in the housing market.
"Since the additional tax was introduced, government received 166 additional property-transfer-tax returns, totalling $10.1-million in additional property-transfer tax paid," the Finance Ministry said.
In the seven weeks from June 10 to Aug. 1, there were 1,974 foreign buyers out of the Vancouver area's total of 14,978 property transfers. That means the proportion of foreign buyers in the region has gone from about one in every eight transactions before the tax to one in every 80 after it was introduced.
Many foreign buyers rushed to register at the land title office in the week before Aug. 2, industry observers say.
Auditors with the ministry have sent 150 letters asking for more information from purchasers.
"Of the 150 letters, 85 audit files have been opened to investigate if the additional tax should have been paid," said the ministry, which is conducting reviews to find out if any transactions have been structured to avoid the foreign-buyers tax. Auditors are following up to check the accuracy of forms in which buyers have declared themselves to be Canadian citizens or permanent residents.
The Vancouver region's housing sales have decreased month-over-month since setting a record in March, and some observers say both sales and prices had been weakening even before the province implemented the new tax.
Earlier this month, the federal government tightened mortgage rules, such as a new standard for gauging whether buyers can handle an eventual increase in interest rates. Ottawa also closed tax loopholes used by some foreign investors, effective on Oct. 3.
The price in Greater Vancouver for detached properties sold last month averaged $1.53-million, down 16 per cent from the peak in January, 2016, but still up 9 per cent from September, 2015.
Brent Jang