Why The Foreign Buyer Likely Won’t Return Anytime Soon
Today the BC Government finally released the latest round of foreign buyer data. Yep, a 15% crash tax on foreigners has done it’s job to this point. The data showed 1,974 home sales to foreign buyers from June 10-August 1… and just 60 sales post-tax.
That’s roughly a 12% drop in foreign buyers depending on how you want to spin it.
Which is apparently what Christy Clark wanted, if you actually believe it. “I think it is fair to say we have had an impact. That was the impact we wanted to have.”
Here’s one problem I do have. The numbers are pulled from the property transfers database. Most deals usually take one month to complete or more. So any deal signed at the end of August might not end up in property transfers until the end of September. Brace for these numbers to jump a bit.
Despite numbers potentially jumping a bit, it’s no question there’s been a mass exodus of foreign buyers. Just see Richmond for example. The total number of transactions involving foreign nationals reached 24.7%. New data shows that number is down to a measly 1.9%.
Is the foreign buyer coming back?
Nobody knows for sure, but I suspect the foreign buyer won’t be coming back anytime soon. As I mentioned in Foreign Investor Gives Insights on New Tax, paying the 15% tax is not the issue, but rather the change of policy that has them nervous.
With all the media attention, and the obvious witch hunt towards the foreign buyer, it’s clear Vancouver is no longer rolling out the door mat. Locals are putting increased pressure on CRA to act and ensure taxes are being paid.
With all the heat on Vancouver, why not turn to areas like Seattle. A beautiful city, cheaper homes, and a stronger economy. Numbers show there’s already been a huge jump in activity on Chinese real estate sites like Juwai.
This has no doubt had an impact on the market. Not only with the foreign buyer leaving the market but the uncertainty amongst locals as well. September numbers look grim. Worse than August. For full details on that you can check out Mid September Market Update and Analyzing Sales Drops Across the Board.