A 15 per cent tax imposed on foreign investors in Vancouver could create more interest in Victoria’s housing market, says one local real estate agent.
Earlier this week, the provincial government announced it will be imposing a new 15 per cent tax on property purchased in metro Vancouver by non-Canadian citizens or residents, in an attempt to deal with the spiralling costs of real estate in the city.
The tax, which is expected to take effect Aug. 2, will not extend to municipalities outside metro Vancouver, such as Victoria, and will be used to support affordable housing and rental assistance initiatives.
New data released by the provincial government said foreigners bought 9.7 per cent of homes between June 10 to July 14 in Vancouver (representing $885 million worth of residential real estate), significantly higher than the earlier tally of 5.1 per cent issued by the province a few weeks ago.
Tony Joe, a realtor in Victoria and the president of the Asian Real Estate Association of America’s Vancouver chapter, said in the short-term the tax will generate interest in Victoria’s already hot housing market.
“A lot of investors who have been thinking about Vancouver have also considered Victoria as well. I think it’s possible that it might tip the scales and have them be a little more interested in Victoria than in Vancouver,” said Joe, who specializes in foreign investors. “The overall thought is all of a sudden Victoria looks like a 15 per cent better deal.”
While the tax is meant to discourage foreign investors, Joe believes many who have their heart set on Vancouver will simply pay the tax. However, there will be some who won’t want to pay, which could result in them moving to other areas of the province, including Vancouver Island, other areas of the Lower Mainland and the Okanagan.
According to Joe, Victoria used to be seen as a quiet town compared to other larger cities. However, that view is quickly changing and more foreign investors are seeing Victoria as a city where their children can be fully immersed in Canadian culture.
“One of the major appeals of Victoria, especially regarding their kids, is that they’re sending their kids here and they’re getting much more of a total language immersion because when they’re in Vancouver, the kids literally don’t need to speak much English because their surroundings and social networks remain very Chinese,” said Joe, adding many of his clients are newcomers — some of whom have lived in Vancouver for two to seven years and have decided to sell their home and move to Victoria, or are purchasing a second property for their children.
“They come over here, Victoria remains very Anglo. To many of the Chinese, when they think of North America, they feel Victoria is more North American than Vancouver.”
Joe believes if the tax does help slow down the real estate market in Vancouver, sellers looking to cash in on their homes and move to other areas will be left in the dust — an affect that could trickle down to Victoria.
In the long-term, Joe is also concerned that foreign investors who do decide to pay the tax and want to sell their place 10 or 15 year down the road will look to recoup all of the costs, including the tax, which will drive the value of the property up as well.