The proportion of home sales involving foreign nationals in Metro Vancouver seems to have plunged since the introduction of the foreign buyers tax, according to the province.
Under the new rate, which came into force on August 2, foreign buyers of real estate in Metro Vancouver have to pay an extra 15% property transfer tax at the time of purchase.
According to new figures released by the BC government, only 0.9% of residential property transfers in the region involved foreign buyers from August 2 to August 31.
That’s a huge drop from 13.2% – the proportion of home sales which involved foreign nationals between June 10 and August 1.
In terms of the total amount of money invested by foreign buyers in Metro Vancouver real estate, that was also down, from $2,161,424,712 to a comparatively low $17,135,140.
As a proportion of total takings from real estate in Metro Vancouver, that’s a drop from 16.5% to an astonishing 0.7%.
The government also provides a breakdown of foreign buyers in Vancouver, Richmond, Burnaby and Surrey.
The highest proportion of home sales involving foreign buyers was in Richmond – which stood at 24.7% between June 10 and August 1, then 1.9% from August 2 to August 31.
The lowest proportion of home sales involving foreign buyers was in Surrey, standing at 9.6% between June 10 and August 1, then 0.6% from August 2 to August 31.
The new stats were released Thursday, just a day after it was revealed that a woman originally from China and buying a home in Langley, is suing the province over the foreign buyers tax.
The figures provided by the government aren’t broken down into equal periods of time, so we can’t say it’s a month-on-month drop. And due to lack of comparative statistics for last year, we can’t say it’s a year-on-year drop either.
But on the face of it, they do appear to show foreign buyers have almost vanished from the Metro Vancouver market. Or do they?
If you look at the cumulative figures provided by the government, which covers the entire period from June 10 to August 31, not that much has changed. According to those figures, 5.8% of all residential property transfers in the region between June 10 and August 31 involved foreign buyers.
But previously, government figures for the period between June 10 and June 29 showed 5.1% of housing transactions involved foreign buyers.
On top of that, there are other factors which are not taken into account by the figures.
The statistics define foreign buyers as anyone who is not a Canadian citizen or permanent resident. It does not distinguish between temporary foreign workers, for instance. Also, it does not account for multiple offer situations, in which sellers have been known to go back to potential buyers for a second round of (hopefully higher) bids.
Even if a Canadian or permanent resident won out in the end, foreign investors seeking to boost their offers may still have helped push the final sale price upwards. And let’s not forget, the skyrocketing cost of buying a home here was the very thing the foreign buyers tax was designed to tackle.
Lack of data has long obstructed our ability to have a factual discussion about foreign buyers in Vancouver – and it seems like that situation is set to continue for a while yet.