B.C. Minister Expects Modest Housing Correction From RegulationsBy
Michael de Jong says buyer tax, federal rules will cool market
Private sector also has ‘big role to play’ on supply: minister
The finance minister of Canada’s priciest province for real estate expects new regulations will cool housing appreciation in Vancouver, where there’s already been a marked decline in sales and foreign investment.
“We’ll see a slowdown in the rate at which the value of housing goes up; we may see a modest correction,” British Columbia Finance Minister Michael de Jong said Monday on Bloomberg TV Canada. “I think it will occur in a managed and orderly way.”
The federal government introduced new rules this month aimed at moderating housing in Toronto and Vancouver, where prices have doubled in the past decade. The moves include a new stress test for buyers and closing a tax loophole used by some offshore buyers. De Jong announced a foreign buyer levy in July, and in September the city of Vancouver said it’s planning a tax on vacant properties starting in January.
Vancouver home sales slipped in August and September, the first two months of data since the 15 percent land transfer tax on offshore buyers came into effect.
Although home sales in the province’s largest city fell 33 percent in September, the most since 2010, prices continued to rise compared with the prior year. The benchmark price of a home, a measure used by the local real estate board, is now C$931,900 ($710,000), up 29 percent from a year earlier.
Foreign investment made up 12 percent of the C$20.6 billion in home transactions in Vancouver from June 10 to Aug. 31, but plunged to less than 1 percent following the tax’s implementation, the British Columbia Ministry of Finance said last month.
The minister said Monday high housing prices are also caused by local demand and a dearth of supply in the city bordered by water and mountains. Applications to build 120,000 housing units are currently before the city seeking approval, he said.
“There’s another part to this equation that we can’t forget and that is supply of building housing,” de Jong said. “That’s something that the private sector has a big role to play and governments need to facilitate at all levels.”
“Let’s not delude ourselves into thinking that the answer to this lies purely within the maneuvering or manipulation of taxation levers,” he said in a separate interview in Bloomberg’s Toronto office.
— With assistance by Pamela Ritchie