B.C. Premier Christy Clark responded Thursday to calls for government action to address rapidly rising real estate prices.

Premier Clark fires back on real estate tax demands

Finance ministry says policies to slow home buying by foreigners would deal economic blow, provide little benefit

Premier Christy Clark has issued a warning that demands for new taxes to rein in rising real estate prices could have serious undesired effects and are largely rooted in mistaken perceptions.

She was responding to a call from Vancouver Mayor Gregor Robertson for the province to charge a higher Property Transfer Tax on the most expensive properties, create a speculation tax on short-term flippers, and give cities more power to track ownership and discourage the practice of leaving investment homes vacant.

“It’s important that we consider any actions carefully to make sure we are helping first-time homebuyers get into the market while protecting the equity of existing homeowners – not just simply raising more taxes for government,” Clark said in a letter to Robertson.

RELATED:Higher tax on luxury home sales urged

Driving down home prices 10 per cent would mean an $800,000 home losing $80,000 in equity and Clark said that could put some residents with large mortgages underwater.

Clark noted local buyers, not foreigners, are responsible for most real estate activity in the region.

“For many individuals and small businesses, this is a source of investment income.”

The premier said the province is actively looking at what it can do.

But she suggested the City of Vancouver can do more itself to address affordability by reducing civic fees and levies that add up to more than $76,000 of the price of a new $450,000 condo.

“Beyond any new taxes to curb demand, there is also the option of increasing supply through better land-use planning,” Clark added.

The B.C. Real Estate Association estimates foreigners account for no more than five per cent of home ownership and real estate activity in the region.

A finance ministry analysis of the issue said Metro Vancouver detached house prices are being driven up largely because of rising demand and shrinking supply, as older houses are knocked down to build townhouses or condos, which have seen much slower appreciation.

B.C. could follow other jurisdictions like Singapore, London and Australia that charge foreigners stiffer property transfer taxes or other taxes. Foreigners also need approval to buy houses in Australia and Singapore, where prices have stabilized but still aren’t considered affordable.

If foreign home buying was sharply pared from the estimated five per cent of Metro home sales now to one per cent, it said, the improvement in first-time buyer affordability would not be significant because of the concentration of offshore buying in high-end homes.

But it estimates such policies would wipe out $1 billion a year in residential real estate sales, causing a 1,400-unit plunge in home building and the loss of 3,800 jobs in the construction and real estate sectors.

“Roughly $350 million in nominal GDP would be lost. This translates into about 0.2 per cent of B.C.’s economy.”

And the ministry warned foreign home buying restrictions could “send mixed messages” to potential business partners and compromise government efforts to welcome foreign investment in other industries, such as LNG.

Even that might not actually reduce home prices, the analysis said, suggesting “drastic measures” targeting both residents and non-residents would be needed to achieve a 10 per cent cut in home prices.

Success would mean erasing $60 billion in home equity across Metro Vancouver, or an average of $85,000 per property, it said.

In addition to more densification, the finance ministry said the federal government could do more to discourage property speculators by taxing their profits as income instead of capital gains in some cases, ensuring capital gains are correctly reported and that flipped investment homes aren’t falsely claimed as primary residences.

The real estate association recommended against any curb on foreign investment in housing but suggested government monitor it by requiring a residency declaration on land transfer forms. B.C. doesn’t track foreign ownership and critics say a lack of data hinders debate on reform.

MoF – Potential Implications of Reducing Foreign Ownership of BC's Housing Market

Just Posted

Nathan Cullen named Parliamentarian of the Year

Skeena-Bulkley Valley MP won the top-title Nov. 5

VIDEO: Taking to the skies to protect moose in the Cariboo Chilcotin

Conservation Officer Service doubles patrols to oversee moose harvest

New Coast Guard radar boosts marine traffic monitoring off B.C. coast

Six radar installations set up for Georgia Strait to Queen Charlotte Strait to Prince Rupert

Central Coast Regional District swears in new Board of Directors

There are three new faces representing our region and two returning directors

VIDEO: Black horse signals ‘sign of peace’ for Tsilhqot’in Nation

Justin Trudeau rides black horse provided by Cooper family

Feds give formal notice for law to end Canada Post strike

Trudeau government ready to legislate employees back to work after five weeks of rotating strikes

Getzlaf lifts Ducks to 4-3 win over skidding Canucks

Vancouver now winless since Nov. 8

Pressure builds for B.C. to recognize physicians assistants

“We can make a difference and I think we’re being overlooked.”

Senators urge Trump to expedite congressional vote on USMCA

The 12 Republican senators are warning of the dangers of getting the trade pact approved in 2019

Bill just one tool to deter foreign interference in Canadian elections: Gould

Bill C-76 is just one means to deter outside interference in Canadian elections

Investigation into B.C. legislature officers began in January

RCMP brought in months after former prison administrator started

Legal challenge filed over high-stakes competition to design $60B warships

The federal government had originally said it wanted a “mature design” for its new warship fleet, which was widely interpreted as meaning a vessel that has already been built and used by another navy.

‘There has to be accountability’: victims of sterilization demand action

Morningstar Mercredi says she woke up from a surgery at 14 and immediately broke down when she discovered the baby she once felt inside of her was gone.

Former B.C. crime reporter pens debut children’s book

Thom Barker channels his giant dog’s phobias into theme exploring critical thinking

Most Read