Vancouver’s overheated real estate market is the target of the British Columbia government’s new legislation adding a 15 per cent property transfer tax for foreign nationals buying real estate in the western city.
Mike de Jong, the provinces finance minister announced the new tax as part of legislation designed to address low vacancy rates and high real estate prices in southern British Columbia.
Stress testing for a downturn
Currently, all residents of B.C. pay a tax of one per cent on the first $200,000 of their purchase, two per cent on the remaining value up to $2 million and three per cent on any portion above that.
As for the new tax, Minister de Jong laid it out; “For example, the additional tax on the purchase of a home selling for $2 million to a foreign national will amount to an additional $300,000,” de Jong explained in the legislature.
The average price for a detached home in Vancouver is now above $1.5 million (Cdn) according to the Real Estate Board of Greater Vancouver.
Meanwhile, the Office of the Superintendent of Financial Institutions said today that some of Canada’s banks must test their ability to withstand a 50 per cent drop in housing prices in the Metro Vancouver area and a 40 per cent drop in the Greater Toronto Area.