I had to read the headlines multiple times. At first, I thought the British Columbia government was simply increase land transfer tax fees to foreign buyers by 15%, so if LTT on a $2,000,000 home was $40,000 (for example), a foreign buyer would pay $46,000. That isn’t so bad. Jack up foreign buyers by an amount that wouldn’t hurt them too much, while adding significant $$ to the government coffers …….. because there is no way you could seriously implement a 15% additional tax on the entire purchase of that same $2,000,000 ….. and then I read this:
The Province Of British Columbia just committed real estate suicide. If they expect foreign buyers to get jacked and say thank-you, they simply don’t understand the world of global finance. Money is liquid and highly personal. When you tell money it’s not wanted, it takes it very personally and quickly starts looking for another home (pardon the pun).
Add in the fact that 95% of foreign buyers are Chinese and that rule of thumb really kicks in. Why? Chinese people aren’t stupid. They didn’t build enormous wealth and survive for thousands of years by being stupid – especially when it comes to their money. When you tell them THEIR real estate is going to cost 15% more than EVERYONE ELSE’s real estate, they’re out, gone, on a bullet.
WHAT WILL BE THE IMPACT OF THIS NEW 15% FOREIGNER LAND TRANSFER TAX
- Wave bye-bye to Chinese buyers. Expect them to head for Toronto and California
- A near instant liquidity freeze on Vancouver real estate – including DOMESTIC buyers who will have no appetite to buy into a frozen market.
- A crash in Vancouver real estate prices … that will spread to all other surrounding municipalities. Why buy anywhere when you can wait and see what happens to previously untouchable real estate.
- A hit to Canadian bank mortgage portfolios in the GVA (Greater Vancouver Area).
- DECREASED real estate tax revenue for government coffers.
- A simultaneous. massive boost to Toronto Real Estate prices
So sorry for all my friends in Vancouver … but a Vancouver Real Estate crash is now inevitable.