VANCOUVER: Canada’s attempt to use taxes to stop sky-rocketing housing prices appears to have worked, although more data is needed before authorities can confirm the full effect of the tax measure.
The latest data made available by the Ministry of Finance of Canada has shown that the number of property transactions involving foreign buyers in the province of British Columbia has fallen significantly since the introduction of a tax on foreign purchases.
Approximately 5 months ago the province of British Columbia introduced a 15 percent tax on the purchase of property by foreign buyers. The tax was intended to rein in widespread speculative purchases by foreign investors.
Purchases by foreign buyers who do not live in Canada has been a factor widely attributed to significant rises in residential property pricing, housing unaffordability, and constrained supply of housing for locals. In the 7 weeks prior to the introduction of the tax in August 2016, approximately 15 000 transactions involved foreign buyers in the Vancouver metro area, however, in October the level had dropped to 4 700.
It was noted that prior to the introduction of the tax there was little effort made to collect information on whether property purchases involved foreign buyers, so it is not possible to compare sales levels with earlier time periods, however, the extent of the reduction in sales is too large to attribute solely to seasonal fluctuations.
