Whether the newly minted 15 per cent additional property purchase tax on foreign national real estate investors in Metro Vancouver will cause a surge of additional pressure on Squamish real estate prices is an interesting question.
Such is the speculation from some quarters, including the District of Squamish, which has submitted a request to the Minister of Finance asking to be included in the taxation catchment.
As government wrestled with the clearly increasing challenge of housing affordability in the Lower Mainland, it was clear that the circumstances are extraordinarily dynamic and unusually complex. The supply side answer was definitely not satisfying to people who tended to focus on foreign demand as the main driver.
In a rare moment of unanimity, members of the legislature supported an additional property transfer tax of 15 per cent on purchases by foreign nationals or foreign controlled corporations.
This is in addition to the one per cent property purchase tax on the first $200,000, two per cent on the portion between $200,000 and $2 million and three per cent on the portion greater than $2 million – all with the intention of cooling the superheated Metro Vancouver market.
The proceeds of the tax will be added to a $75-million affordable housing fund that will be invested in a range of projects right across the province.
Other initiates included in Bill 28, the Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act 2016, include ending self-regulation in the real estate industry and a vacant home tax option for the City of Vancouver. On budget day 2016, the government instituted the luxury home property transfer tax and eliminated the property transfer tax on new homes under $750,000, which was in addition to the first-time home buyer property transfer tax exemption on homes valued under $475,000.
The fact that people are relocating to Squamish from the Lower Mainland and beyond is really not much debated, although the impact of foreign capital seems to me more tangential. If one has residential assets in Metro, which have increased in value at an extraordinary rate over the last few years, it should be a surprise to no one that taking profits and relocating to a less costly but nearby region with the end result being mortgage free, or nearly so, is a highly attractive outcome.
In many ways it has surprised me that this phenomenon was so slow in coming. With the completion of the Sea to Sky Highway Improvement project in 2010, I expected to see the housing market light up.
After all, 45 minutes east of downtown you are in Surrey and 45 minutes west you are in paradise. Yet it wasn’t until 2014 that the market really started to move and this past year it’s been on fire.
That said, I am not convinced that the market has been directly driven by foreign investors. Even if the Vancouver market does cool, Squamish will still provide great value to the current Metro owner and with the quality of life offered, they will come. To contact, email [email protected].
