RESIDENTIAL property prices in the city of Vancouver on Canada’s west coast have collapsed following the August 2 imposition of a 15 percent luxury real estate tax, falling by more than 20 percent in less than a month, according to several news reports.
The average home price in Vancouver, which was just over C$1.4 million in mid-July, tumbled 20.7 percent to C$1.1 million as of August 29, data from Canadian property monitor Zolo.ca showed. Over the past three months, prices have dropped a total of 24.5 from a high of C$1.5 million in April this year.
Zolo.ca reported that home sales have become virtually paralyzed, with only three sales in the popular West Vancouver area between August 1 and August 14, compared with 52 in the same two-week period last year, a drop of 94 percent.
According to a report by Bloomberg, the tax, which has affected mostly Chinese buyers, drew a furious reaction from China’s consul in Vancouver. In an interview, Consul-General Liu Fei fumed, “Why a 15 percent tax? Why now? Why this rate? What’s the purpose? Will it work? The issue is to help young people afford housing. I’m not sure even a 50 percent tax would solve the problem.”
Liu’s comments came as the fallout from the tax is expanding. Vancouver-based Urban Analytics in a report this week said that as many as 2,300 transactions with foreign buyers worth a total of C$1.25 billion were pending at the time the tax was imposed, and that nearly all of them were at risk of failing.
The report cited Re/Max Holdings’ Western Canada Regional Executive Vice President Elton Ash, who estimated 45 home sales through his company could collapse this month. The tax has suddenly chilled the market and “virtually no business is being done,” he was quoted as saying.
Urban Analytics noted, however, that while the tax covers the entire province of British Columbia, only Vancouver appears to be affected, with property sales in other areas of the province proceeding at a similar pace as before the imposition of the tax.
VARIOUS NEWS REPORTS