Victoria is now second only to Richmond in the number of residential real estate transactions in this province involving foreign buyers. According to data from October, 6.3% of the sales in the Capital Regional District were to non-residents. This volume is almost double the amount of September transactions.
The surge has some critics calling for the 15% foreign buyer tax introduced in August to be expanded beyond the Vancouver area. Although the BC government is closely watching the real estate trend in Victoria, and the tax is structured in a way to allow the addition of other geographic areas, many key decision-makers believe that more data is needed.
Foreign home ownership in Victoria has only been measured for a few months, and so the data doesn’t yet show seasonal trends. Analysis also won’t yet show whether the data represents a true trend or a one-time burst of activity.
More broadly, the latest numbers from the Canada Mortgage and Housing Corporation (CMHC) show that foreign real estate investment is actually quite a small piece of Canada’s overall housing market. There is little information on the motivation of foreign buyers – whether they are seeking true investment or simply parking funds in real estate.
Similarly, the impact of the tax on the Vancouver market is largely unknown so far. Although the initial implementation resulted in a drastic reduction in the number of foreign purchases, October saw the volume of transactions increase from 1.8% in September to 3% of the city’s total (approximately $115 million).
In our team’s best estimation, the Vancouver “trial balloon” of a foreign buyer tax will definitely spread – to other regions of BC, if not to other parts of the country. Risk Diversity Pricing in mortgage rates is something we expect to see developing throughout 2017, and those differences will be influenced by things like regional taxes.
If you’re wondering what the market looks like for your home ownership plans, why not set up a free consultation with one of our planners? Contact Auxilium Mortgage today: call Toll-Free 1-855-590-6520 or visit us at 307 Goldstream Avenue during regular business hours, Monday through Friday 8:30 a.m. – 5:00 p.m. Our team can also arrange an appointment evenings or weekends to work with you.
This article presents the informed opinion of the author. Any major financial decision, such as whether to purchase a home, should always be made after seeking professional guidance you trust for your unique situation.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.