Foreign purchases of Metro Vancouver homes plunge

Foreign purchases of Metro Vancouver homes plunge

When The B.C. government brought in a 15 per cent tax on foreign homebuyers last July, the goal was to cool down Metro Vancouver's sizzling real estate market.

On Friday, new data released by the Finance Ministry showed that between August and September, foreign investment in residential real estate accounted for less than 1.3 per cent of all the properties sold in Metro Vancouver.

"The new tax is having the effect we hoped for in that the market has calmed down. Local people looking to buy are finding there's less pressure and the market is coming back into balance," said Liberal MLA Andrew Wilkinson, speaking on behalf of the finance minister on Friday.

Between Aug. 2 and Sept. 30, only 152 homes were purchased by foreign buyers in Metro Vancouver, less than the provincial average of 1.7 per cent during the same period.

Still, Wilkinson cautions it's early days and says the coming months will provide a much more accurate picture of the impact the tax is having on foreign sales.

Tsur Somerville, a professor with UBC's Sauder School of Business, says the tax is good for the province.

"I think there's a sense of satisfaction that there's a consistency in the results, that the decline we saw after the tax seems to be holding steady," he said.

Somerville says he'll be monitoring the new data month-to-month as it comes in, along with the government.

"All you can really tell is there are a whole bunch fewer people who are registering sales, non residents who are registering sales, that's all you can tell."

But he says, so far, the numbers speak for themselves.

"It is having an effect. At the same time, anyone who thinks things are going to be more affordable on the Lower Mainland, they're going to be in for a surprise. That's not going to happen."

In the three months since the tax kicked in, foreign buyers have had to pay more than $10 million to the province.