Vancouver builders say foreigner tax hits houses more than condos

Wed Oct 19, 2016 11:15am EDT
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By Nicole Mordant

VANCOUVER (Reuters) - A tax on foreign buyers aimed at cooling Canada's priciest property market has forced some developers and builders of detached Vancouver homes to hit the pause button, but has had much less effect on the city's condominium market, according to industry players.

Vancouver home sales in September were down by about a third from a year earlier after British Columbia implemented the new 15 percent tax in August. The tax was put in place in Vancouver because surging prices prompted worries about a bubble and speculation by foreigners, mostly from China.

In a city where million-dollar homes have been torn down to clear way for new ones that are even more expensive, some builders say the tax and other measures are shrinking order books and threatening jobs.

"I have lost two homes, at least, based on the government's latest ruling," said Larry Clay, founder of Clay Construction.

Clay said a developer who had lined up the company to build two 4,500-square-foot homes near Vancouver instead decided to rent out one property and look for a cheaper builder for the other, on concerns slumping sales would hit prices.

Sales of yet-to-be-built detached homes at developer Morningstar's new 68-lot development in Maple Ridge, a bedroom community east of Vancouver, have dried up completely in recent weeks after 12 initial sales, said Ron Rapp, vice-president of construction at Morningstar.

The trend was highlighted by data from the province's Homeowner Protection Office (HPO), where new homes must be registered before building permits are issued or construction starts. The Vancouver area accounts for three-quarters of the province's registrations.

Registrations of new detached homes fell 24 percent month-on-month in British Columbia in September, the biggest fall in 20 months. Year-on-year the fall was 1.5 percent, the only decline so far this year.   Continued...

People work at a construction site in Vancouver, British Columbia June 20, 2011.   REUTERS/Jason Lee