The challenge
Metro Vancouver home prices were soaring, and foreign buyers were blamed.
The case
In August 2016, with home prices soaring, British Columbia imposed a 15% additional property transfer tax on foreign buyers in Metro Vancouver, later raised to 20%. Purchases by foreign buyers fell sharply and prices dipped in the following months. But prices recovered and kept rising in later years, since foreign buyers were a small share of the market and the underlying shortage of homes remained. Canada later introduced a national ban on most foreign purchases. B.C. government data showed foreign buyers involved in 13.2% of Metro Vancouver residential transfers before the tax, compared with 1.3% from August 2 to September 30, 2016.
Why the results were mixed
Targeting foreign buyers was politically popular and did cool speculation briefly, but it couldn't fix a shortage of homes. Affordability depends mainly on how much housing gets built.
Sources
- Government of British Columbia: Additional property transfer tax for foreign entities and taxable trustees.
- Government of British Columbia, Ministry of Finance (2016). News release 2016FIN0047: real estate transaction data, September 2016.
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