“Here’s my prediction of what’s happening: There is almost a perfect storm converging where you have foreign buyers taking a step back at the same time Vancouverites would typically go on vacation in August. So the market should have an ebb and flow in August anyway,” Peter Kinch, a Vancouver-based investor and mortgage broker, told Canadian Real Estate Wealth. “Which would be borne out by the September sales numbers. September sales numbers are in large part reflected in the activity that was happening in August. We local people go on holidays, so there is a slowdown normally.”
Foreign buyers in Vancouver were slapped with an extra 15% tax at the beginning of August, which had an immediate impact on home sales in the lower mainland.
Home sales dropped 26% year-over-year in August; that trend continued in September, with sales falling 32.6% year-over-year and 9.5% month-over-month.
And while foreigners wary of parking their cash in Vancouver real estate may be partly to blame, Kinch maintains that isn’t the full story.
“The year-over-year comparisons can get skewed and the problem is that will create a perception that the foreign buyers tax has an enormous impact when really that was a portion of people going on holidays,” he said, arguing the sales cycle will return to normal with a rebound in the spring of next year.
We’ll just have to wait and see.
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Following two months of slagging sales in Canada’s once-busiest market, one professional is arguing the recently implemented foreign sales tax isn’t entirely to blame.