The City of Victoria is expected to ask the provincial government to enact a real estate foreign buyers’ tax in response to rising prices and a low housing supply.
Such a tax would mirror a similar policy introduced in August 2016 within the Metro Vancouver region, which caused home sale numbers to plummet and skyrocketing prices to stabilize. A vote last week gave the proposal tentative approval, and the request will be formally made once the decision is ratified. Only the provincial government can enact such a tax.
After the foreign buyers’ tax in Metro Vancouver went into effect, prospective foreign buyers turned their interest to other markets in BC and elsewhere in Canada.
House prices in Victoria increased significantly; according to the Victoria Real Estate Board, the benchmark value for a single family residence in March 2017 increased by 19.1% to $790,100 compared to the same period the previous year. And with 1,556 active listings last month, there were also 40.6% fewer listings than March 2016.
“We predicted early in the year that we wouldn’t see a continuation of the record sales numbers that we saw in 2016,” said 2017 Board President Ara Balabanian. “However, we are still in a very active market, as evidenced by the fact that this is second highest March on record if you remove that record breaking 2016 data. We saw nearly 200 more transactions last month than March 2015, when 734 properties sold.”
Additionally, the provincial government estimates the proportion of foreign buyers in the Victoria housing market has risen from 3% to 10% since the implementation of the Metro Vancouver tax.
Housing prices also soared in the Toronto market after the Metro Vancouver tax went into the effect. Victoria City Council’s decision comes just days after the Ontario government announced plans to enact a similar 15% foreign buyers’ tax within the Greater Toronto housing market.