The 15% Property Tax on Foreigners: In Perspective

Blog by Arnold Shuchat | July 27th, 2016

It is a huge amount of money, 15%.  Most investment advisors would thank G-d for such an annual return on their clients' investments. I wanted to put this amount in perspective by graphically illustrating the price history of our local real estate market in a few areas.  

The graph below is a dynamic one, in that you can scroll over any monthly data points and you will be able to see the Housing Price Index which is a statistical average house price, for that month.  Featured are Richmond, Vancouver West, and North Vancouver, which is almost identical to Richmond pricewise.  Annually, we can see that Richmond lead the way with price increases for single family homes of 48.5%.  In the last two months alone, Richmond has seen its prices increase by 9.28% and 3.4% for May and June.  Is 15% for the price of admission too steep?  Will investment here be only about the tax, or will foreigners still see the jewel of our Lower Mainland?

If foreigners only needed 35% as "new to Canada", now, they will need to come up with 50% as a down payment.  That amount of money certainly will not be as easy to withdraw from China given tighter currency restrictions.  The effect will have to be deafening in its silence.

I will be monitoring sales activity closely after August 2 when the tax becomes effective.  It will be interesting to see how much revenue the province manages to squeeze out of the new policy.