VANCOUVER (NEWS 1130) – Foreign homebuyers in Metro Vancouver made up less than two per cent of the market in September.
New data from the BC government shows the percentage of buyers from outside the country in September dropped to 1.8 per cent. Compare that to 13.2 per cent from June and July before the tax on foreign homebuyers. In August that rate plummeted to 0.9 per cent.
Tsur Somerville with the Sauder School of Business says this is far from the complete remedy for the real estate market that some people were thinking.
“This is in no way solving our housing affordability problem. That is going to remain. This is addressing one part of it, and I think it’s an important part to address but it’s not the answer.”
He says local demand and supply will continue to add to the affordability issue.
But he believes the government can celebrate knowing the foreign homebuyer percentage not only dropped dramatically but stayed low too.
He says there will always be suspicions of people trying to cheat the system.
“You can’t prove what’s not happening. If you want to believe that all the sales have gone underground or are being done by somebody else, there is no way to really demonstrate whether that is the case or not.”
BC Liberal MLA Andrew Wilkinson says the government is well aware of people who are trying to avoid paying the new fees.
The BC government has sent out 150 letters to people who may be trying to avoid paying the foreign buyers tax.
The province has also opened 85 audit files on those cases.
“There’s always the concern when a new tax appears that there may be a small number of people who think they’ll do something clever by misrepresenting their status and thereby hoping to evade the tax. That is illegal.”
He says they will continue to look into any suspicious activity.
“We will be following up and if there is a basis for requiring more information we will get that. And if the information discloses tax evasion, we will pursue it for payment of the taxes.”
Wilkinson says there will always be a small group of people trying to break the rules, but the rate of foreign homebuyers shows the provinces plan is working.
“The market has calmed down. It’s in a much more balanced state and the number of off-shore purchasers has dropped significantly.”