In just two weeks since British Columbia enacted its new foreign buyer tax on residential properties in metro Vancouver, an e-mail inquiry to 27 brokers has found that thousands of real estate deals, collectively worth millions of dollars, could potentially collapse and prompt legal action as a result of the tax. Just one week ago, the Real Estate Board of Greater Vancouver estimated the at-risk deals to be worth at least $404 million based on the average foreign buyer purchase of just under $947,000, and this may only be the beginning.
“It’s a domino effect,” says Elton Ash, RE/MAX’s regional executive vice president for western Canada. This comes not only from foreign buyers being affected, but also Canadian citizens who could have or were in the process of selling contracts and properties to those buyers. Some deals also involve condominiums which are still being built, meaning some effects of the tax could “take years to play out,” according to REBGV president Dan Morrison.
In just twelve months, the cost of a detached home in Vancouver jumped a startling 38% as of July, and for the metro Vancouver area B.C. is following in the footsteps of Australia and the U.K., which have enacted similar measures to control rising prices in already-expensive and borderline-unaffordable housing markets.