The collateral damage in Vancouver’s market

The Vancouver foreign buyer tax is hurting homegrown investors, according to one.

"Absolutely, [it’s negatively impacting Canadian buyers]. Anybody who would say different would be ridiculous. As an investor it’s been hurtful in terms of narrowing the market,” Hans McFarlane, a Vancouver-based investor, told Canadian Real Estate Wealth.

“You’re narrowing the demand for your house and who is going to have a desire to buy it. It’s certainly brought the prices down and cooled the market.”

Vancouver’s Liberal government enacted a piece of legislation August 2 that included a 15% tax on foreign buyers of real estate. And the effect was immediately felt.

Sales dropped in August, according to the Real Estate Board of Greater Vancouver. Total sales fell 26% year-over-year to 2,489 last month. 

They were also down 3.5% from the 10-year sales average for August. 

However, the board hasn’t quite sounded the alarm.

“It’ll take some months before we can really understand the impact of the new tax,” Dan Morrison, REBGV president said following the release of the data in early September. “We'll be interested to see the government's next round of foreign buyer data."

We don’t need to wait to see the impact, though, according to McFarlane.

“The impact has been immediate. The premier has been quoted saying it has had the effect it was supposed to have,” he said. “It’s hurt the people who live here who have homes and it’s done nothing for the people with low income who want to buy in the market.”

How does McFarlane, as an active investor, feel about the tax?

“Personally, I think the whole thing is ridiculous,” he said. “I believe in a free market economy, if I’m selling my house or my car I don’t care who buys it.”
 

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COMMENTS

  • by Tony 2016-09-12 1:41:28 PM

    Poor Hans... Everyone feels so sorry for you

  • by Kread 2016-09-12 1:50:22 PM

    So you don't mind selling your property for inflated value when the money comes
    fraudulently from overseas scam artists who borrow money from Chinese banks for investment
    in China them disappear to Vancouver to buy mansions with no intention of paying it back?

  • by MFenn 2016-09-12 1:59:54 PM

    I don't quibble with the terms 'hurtful' and even 'ridiculous', used above.

    One supposed property market for foreigners and another supposed property market for Canadians is an illusion. Investors comparatively have some confidence in Canada and this is a good thing, not a bad thing. This confidence needs to be respected and enhanced; the last thing needed is to drive investors away. Driving investors away is what this draconian, unconsulted tax measure does. "Drive investors away and feel better" is not going to make Canada's economy stronger.

    And it's an illusion to think that - Diefenbaker style - saying "Go away Bay Street and overseas investors" will make the property market and Canada's economy stronger. It's illusory populism which didn't work for Dief - for all his nationalist huffing and puffing - and it's not going to work now.

    To all the supposedly professional realtors who were complaining about Chinese buyers before the 15% tax was introduced in BC - and yes many did, there's no denying it - and to all the supposedly professional realtors who have subsequently gloated about the discomfort of Chinese buyers since the 15% tax had been introduced - and yes many did, there's no denying it - it's not your role to stir up racial specific hostility to a particular demographic of buyers. I think measures need to be taken by realtor associations to curb this unprofessional behaviour.

    And with over half of Torontonians originating from someplace other than Canada, how can it be possibly right for backward-looking nativism to be introduced into the Toronto property market?

    This head tax by another name all reminds me not only British colonialists but also a little of Malaysian politics, where one class of participants in the market proclaim themselves the 'sons of the soil' and then proceed to penalize 'foreigners', i.e., Chinese, on whose entrepreneurship and investment the economy substantially relies.

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