Eye-popping returns, coupled with Canada’s reputation as a stable sanctuary, has made Vancouver a particular magnet for global cash in the past years—but the 15 per cent foreign buyers’ tax implemented a year ago did not have a significant impact on prices, especially when compared to the levy’s effect on overseas investor participation.
Foreign buyers, who accounted for as much as 17 per cent of sales by value before the tax, declined to 1.8 per cent the month after the introduction of the tax. However, the cost of a typical home fell no more than 4 per cent before resuming its climb, according to figures from the Real Estate Board of Greater Vancouver.
The data indicated that Canadians, as much as foreign investors, are inflating the market. Around 41 per cent of baby boomers said home equity made up more than 60 per cent of their household wealth, according to a survey by Manuflife Bank published in May. For 21 per cent, it made up more than 80 per cent.
The city has consistently showed just how difficult it is for policymakers to control runaway prices. Despite a succession of government tightening measures, the price of the typical detached house surged to a record $1.6 million in July.
“It’s obviously very frustrating for local residents, but I don’t see that buying interest going away anytime soon,” mining and film magnate Frank Giustra told Bloomberg. “All this free money has driven assets through the roof in Beverly Hills, London, Paris, all these desirable places."
In Vancouver proper, sitting on a house can be more lucrative than working a job. A single-family property appreciated almost $600,000 on average in the area in 2016, according to mathematician Jens von Bergmann, who founded Vancouver-based data analysis and visualization company MountainMath Software.
As a group, the value of the properties surged by $47 billion, more than double the cumulative take-home income of Vancouver’s residents, Von Bergmann calculated.
Decline in Vancouver listings the largest nationwide—CREA
There is now better foreign buyer data than ever before