This week, the B.C. government introduced a new 15% tax on all non-citizen and non-permanent-resident buyers of residential real estate in Metro Vancouver. The new tax applies to all transactions that close after August 2, regardless of when those contracts were entered into as there was a concerns that grandfathering would create a run on the market. Data from the BC government shows that foreign nationals buy as many as 10% of the homes sold in Metro Vancouver. In some neighbourhoods, foreign ownership is as high at near 20%. There is a prevailing impression that all foreign buyers are big-moneyed cash buyers. It is not true. But the new tax is aimed to help curb price increases and keep homeownership accessible for the middle class.
Although this is a controversial move by a Canadian government, Metro Vancouver is not alone. Other countries have already restricted foreign investment and speculation in local housing markets.
Australia bans non-resident investors from buying real resale houses unless they plan to live there full time.
New Zealand requires investors into Auckland to have 30% deposit.
In Britain, foreign investors are now required to pay capital gains taxes as high as 28% if they are not full-time residents.
Singapore has long restricted foreign purchases of local real estate.
Switzerland and Hong Kong also have restrictions in place.
Back in Ontario, there are rumblings that this will draw more foreign buyers to Toronto, exacerbating Canada’s second hottest real estate market. Many are wondering if Metro Toronto will follow Metro Vancouver’s lead.
I want to point out that foreign ownership is only one of the many factors affecting real estate prices. It seems though that it is the easiest one to address.
Having said that, back here in Waterloo, at least once a week I get an email like this:
Hi Keith,
We visited Waterloo early this week as part of our university search for our son for next year. We live in Hong Kong and travel often to Toronto where we have relatives. I would be interested to invest in KWC. The focus would be for capital gain or rental return or better a combination of both. I may want to have a 3 bedroom property for our own living if our son studies at Waterloo, but this should not be the main focus, my mobile is +852 xxxxxxxxx. We can have a whatsapp call today if you are available. I will leave for Hong Kong this evening. Let me know. Regards,
Kevin
Final thought
Sure we have foreign investors but blaming foreigners for our high prices in Toronto and Vancouver is like blaming Torontonians for our high prices here. That is not fair and not right
