The tax changes announced by British Columbia will have a major impact on the province’s housing market according to brokers.
A survey of 535 real estate professionals in BC and Alberta carried out by Royal Le Page found that most expect the measures designed to target foreign investors will also hit those who own second homes.
Although the government says the number of local homeowners who will pay the speculation tax will be less than 1%, the poll found that 85% of advisors say confidence in the BC housing market has been dented.
More than three-quarters say there will be a decrease in sales in the three months following announcement of the tax change, and 57% say prices will decrease.
"The expected impact of the proposed housing taxes announced in British Columbia should not be taken lightly," said Phil Soper, President and CEO, Royal LePage. "Homeowners across the province will feel the effects as major policy changes like this are also amplified by a drop in consumer confidence. We saw this happen in 2016 when the previous government launched a tax on foreign investors. A small number of international purchasers withdrew from the market – along with a huge cohort of domestic homebuyers.
He added that buyers across Canada were already impacted by the tighter mortgage regulations and rising costs.
Around 77% of respondents said that international buyers will be deterred by the additional tax, 45% said that BC residents will be most affected.
"We expect that the new taxes will materially impact communities that rely on recreational property markets for the health of their local economy," said Soper. "There will be some Canadians in British Columbia and across the country that will choose to sell their properties in the province as the new taxes add to the cost of homeownership.
In Alberta, 80% of advisors said that interest in BC property would be damaged by the new tax.