VANCOUVER (NEWS 1130) – The Greater Vancouver Home Builders Association expects big job losses in the coming months, and it’s blaming the foreign buyer tax.
The numbers being thrown around by Bob de Wit, chief executive of the association, are approximately 5,000 jobs over the next three to six months.
And he says those losses could worsen depending on how this all plays out.
“The short-term impact of the new property transfer tax has the been the cancellation of renovation contracts,” says de Wit.
“That’s where we’re seeing the early job losses. In the longer term, it remains to be seen what the impact will be on the larger market. But if we see a reduction in housing starts like we would expect…that could be 5,000 jobs. We think that’s a reasonable thing to expect over the next three to six months.”
Five thousand jobs represent around 10 per cent of those working in this industry in the region.
De Wit says his organization isn’t opposed to the tax per se — it’s the retroactive application to already signed deals that he feels is adding to the uncertainty.
“It was the retroactive nature of it that has affected all these deals,” shares de Wit.
“Both on the renovation side and also on the pre-sale side, where you have buyers who now have higher tax obligations and they want to get out of deals. Getting out of those deals has a domino effect, in that it affects the financing of projects down the road.”
Beyond cancelled renovations, de Wit expects some planned projects will be scaled down.
“There’s roughly 2,500 to 3,000 presale contracts out there that are held by foreign buyers,” explains de Wit.
“Roughly 20-30 percent of them are trying to get out of those deals, and if enough of them get out of those deals or walk away, it affects the project financing for those new developments, and if that happens, it delays the introduction of those units to the market, which affects supply, which affects prices.”