“We were already on a downward trend, and then as soon as they announced the tax, that escalated it,” agent Steve Saretsky told Reuters.
Fears of lower market performance since July 25 (the day the tax was announced) have also spread among domestic buyers, agent Tom Gradecak added.
“It's the whole negativity of the tax. They think the market is going to go down, so they aren't buying,” Gradecak explained.
Saretsky, who looked at sales data prior to the introduction of the tax, noted that sales volume in the Greater Vancouver area declined by a drastic 18.9 per cent year-over-year in July, despite a 32.6 per cent surge in prices.
In the week beginning July 25, only 4 detached sales were completed in West Vancouver, where the new tax would add over C$500,000 to the C$3.59 million average price of a detached home in the area. This sales volume stood in stark contrast to the 29 transactions for detached properties on the week of July 11.
According to Juwai.com executive Matthew Moore, other major markets like Toronto, Ottawa, and Calgary are poised to become more important in the national housing scene, as enterprising foreigners would attempt to move their focus away from Vancouver to avoid the tax.
Industry players in these cities are taking a wait-and-see approach to these predictions, however.
“It'll be a while before we know how it's all going to play out,” Toronto-based agent David Fleming said.
B.C. apartments also feeling the pinch of new tax
New B.C. tax might exacerbate Toronto situation
B.C.’s new tax on foreign home buyers might have garnered acclaim from quarters calling for stronger government intervention on Canada’s hottest housing market, but local real estate agents have already observed the beginnings of what they called a “chilling effect” in Vancouver.