New speculation tax would the main factor in this decline
In its latest forecast, brokerage giant Royal LePage stated that prices for recreational property (including second homes) in British Columbia will decline by 2.8% this year, down to $531,333.
Citing a new speculation tax as the main factor in this decrease, Royal LePage predicted that the tighter controls against outsized price growth will lead to more sell-offs, while at the same time discouraging other potential owners from buying – and might even prompt these would-be buyers to look elsewhere.
“While these policies were billed as a move to impede speculation and foreign investment, international purchasers make up a very small portion of the recreational market, and the dreaded ‘house flippers’ are an urban phenomenon,” Royal LePage president Phil Soper said in a statement earlier this week, as quoted by Blomberg.
Read more: Retirees stoking demand in recreational market – survey
The tax will penalize owners of non-primary residences by approximately 0.5% of the home’s value. In 2019, the levy will increase to 1% for non-B.C. residents and 2% for foreign nationals. The tax will cover several sections of Metro Vancouver and Abbotsford.
On a national basis, the recreational real estate market will experience 5.8% growth this year, up to an average of $467,764, Royal LePage predicted.
Ontario and Alberta are expected to lead the charge in this, with increases of 10.4% (up to $535,885) and 8.9% (up to $770,100), respectively. Market activity will mainly be fuelled by the relatively wealthy consumers in the 36 – 51 age range, as well as by equity-rich baby boomers approaching retirement.
