VANCOUVER (Reuters) - Vancouver real estate sales have tumbled since plans to tax foreign buyers in the Canadian city were revealed last week, local real estate agents said, a sign the government’s bid to slow the market was causing an immediate chill.
The 15 percent levy, which was unveiled by British Columbia’s government on July 25 and came into effect on Tuesday, drives up costs for buyers from China and other countries who have helped make Vancouver Canada’s most expensive property market.
While agents scrambled to file property transfers before the deadline, sales dropped dramatically, said Steve Saretsky, an agent who analyzed sales volumes.
“We were already on a downward trend, and then as soon as they announced the tax, that escalated it,” he said.
In Richmond, the suburb which according to provincial data has the highest concentration of foreign buyers, just four detached homes sold the week of July 25, compared with 25 the week of July 11, according to Saretsky’s data.
In Vancouver’s west end, where the tax adds more than C$500,000 ($384,000) to the C$3.59 million price tag for a typical detached home, detached sales fell from 29 to just four.
For all of July, sales volumes in Greater Vancouver fell 18.9 percent year-on-year, though prices were up 32.6 percent.
Agents also attributed the dive since July 25 to local buyers taking a step back.
“It’s the whole negativity of the tax. They think the market is going to go down, so they aren’t buying,” said agent Tom Gradecak.
Agents cautioned it could be months before the full effect becomes clear.
Even before the tax came into effect, Vancouver’s high prices were prompting some Chinese buyers to consider other cities, said Matthew Moore, an executive with Chinese property portal Juwai.com.
“We’ve been watching for months as increasing numbers of Chinese buyers look for markets with some of the same lifestyle appeal but lower entry prices,” he said. “Not everyone in China is a billionaire.”
Seattle stands to benefit the most from the shift away from Vancouver, with Canadian cities like Toronto, Calgary and Ottawa also increasingly on buyers’ radar, Moore said.
But agents outside of Vancouver said they didn’t necessarily expect a rush of foreign buying.
“It’ll be a while before we know how it’s all going to play out,” said Toronto-based agent David Fleming.
Additional reporting by Clare Jim in Hong Kong and Andrea Hopkins in Ottawa; Editing by Jeffrey Hodgson and Leslie Adler