Like Melbourne and Sydney, the Vancouver real estate market has been hot for a decade, and red hot the past 12 months. Property is largely out of reach for the median city-dweller in most parts of the city.
Like Melbourne and Sydney, perhaps more so, foreign money, particularly Chinese—is being pointed out as a major contributing factor. A lot of focus in recent months has been on foreign money from potentially corrupt sources.
The local and British Columbia governments have copped a lot of criticism over the issue—accusations from neglect through to complicity and profiteering. In response, and likely with an eye on the polls, they’ve made an interesting move.
Starting yesterday, foreign buyers of property in Vancouver will pay a 15% transaction tax. That’s a whopping hit that will work to significantly cool the foreign bid and the property bull market. Furthermore, the provincial government is looking at a vacancy tax levied on unoccupied homes.
Those saying that foreign inflows into markets like Australia’s metropolitan markets, London and Vancouver are small and irrelevant are likely wrong. And those blaming it as the chief cause of our bubbles are probably wrong too. Vancouver is going to provide an interesting case study over the coming months and years.
I’m also intrigued to see what effect it will have on inflows into Australia. The NSW government is introducing a 4% stamp duty surcharge on foreign buyers, starting next year. But, compared with Vancouver, Australian cities might have just gotten even more attractive as a destination for the investment dollar of Chinese nationals. Absent new measures, the inflows might get more torrid.