Liu Fei, China’s consul general for the city of Vancouver, recently challenged British Columbia’s “hastily-imposed” foreign buyer tax measure and questioned its justification.
“Why a 15% tax? Why now? Why this rate? What’s the purpose? Will it work?” she asked in an interview last week. “The issue is how to help young people afford housing. I’m not sure even a 50% tax would solve the problem.” The tax could potentially derail thousands of real estate deals, and Liu also claims to have received calls from Chinese students in distress because they are locked into contracts to purchase homes, but cannot suddenly secure more money for the 15% tax, and she has expressed these concerns to provincial ministers.
Urban Analytics Inc. estimates that about 2,300 units had been pre-sold to at-risk foreign buyers when the new tax took effect, and although the tax has “chilled” the market and resulted in little to no business currently being done (according to Elton Ash of RE/MAX Holdings), the countless failed deals could contribute to a domino effect which may jeopardize more sales to come.
While Chinese nationals make up the largest segment of foreign home-buyers, they only make up 3% of total transactions in the Vancouver area and Liu believes it is unjustified to blame rising property prices on foreign buyers, especially Chinese nationals. “This is a big country with a small population,” she said. “It needs immigration to grow the economy.” Her suggestions for alternative approaches to making housing more affordable include taller buildings to house increasing populations, more extensive public transit systems, and using “timelier data” for better accuracy in matching supply with demand.