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Federal foreign buyers tax unlikely to improve Metro Vancouver housing affordability: economist

Last Updated Dec 2, 2020 at 2:37 pm PST

Homes are pictured in Vancouver, Tuesday, April 16, 2019. THE CANADIAN PRESS/Jonathan Hayward
Summary

Don't expect a federal foreign buyers tax to push home prices here down significantly, says an econmist

While the government wants to push ahead with the idea, Tom Davidoff says it won't do much

Davidoff says if the tax does have any impact on prices, that will likely be restricted to higher-end properties

VANCOUVER (NEWS 1130) — A federal foreign buyers tax likely wouldn’t push housing prices down significantly, especially in our region, says an expert.

UBC economist Tom Davidoff, with the Sauder School of Business, is providing that assessment, with the Liberal government saying it plans to push ahead with that measure.

The government says the plan will benefit first-time homebuyers and put more homes on the market by taxing homeowners who use Canada to passively store wealth in housing.

RELATED: Government plans foreign buyers tax in bid to create affordable housing

Davidoff points out measures already taken by the province and cities like Vancouver have potentially already done the heaving lifting on that front in B.C.

“If this were 2016, I think the consequences could be quite significant,” says Davidoff. “But given we’ve already had the [provincial] foreign buyer tax, and the empty homes and speculation taxes, I would imagine the base for this tax is going to be quite small.”

RELATED: Vancouver will triple empty homes tax for 2021

Davidoff says if the tax does have any impact on prices, that will likely be restricted to higher-end properties.

“It will raise some revenue for the government,” acknowledges Davidoff. “It may have some additional impact on lowering prices, probably largely at the higher end of the property distribution, but in the short run I don’t see much price impact at all.”

RELATED: Metro Vancouver home sales up despite buyers looking outside region: real estate group

Last month, home sales were hot in Metro Vancouver — 24.6 per cent above the 10-year average for the month — with prices pushed up to a benchmark $1.5-million for a detached house, according to the Real Estate Board of Greater Vancouver (REBGV). The price is up 10 per cent from last year.

Meanwhile, the low number of homes for sale and ongoing demand has RE/MAX predicting a four to five per cent price increase for Vancouver homes in 2021.

-with files from Mike Lloyd and the Canadian Press