B.C. Premier Christy Clark responded Thursday to calls for government action to address rapidly rising real estate prices.

B.C. Premier Christy Clark responded Thursday to calls for government action to address rapidly rising real estate prices.

Premier Clark fires back on real estate tax demands

Finance ministry says policies to slow home buying by foreigners would deal economic blow, provide little benefit

Premier Christy Clark has issued a warning that demands for new taxes to rein in rising real estate prices could have serious undesired effects and are largely rooted in mistaken perceptions.

She was responding to a call from Vancouver Mayor Gregor Robertson for the province to charge a higher Property Transfer Tax on the most expensive properties, create a speculation tax on short-term flippers, and give cities more power to track ownership and discourage the practice of leaving investment homes vacant.

“It’s important that we consider any actions carefully to make sure we are helping first-time homebuyers get into the market while protecting the equity of existing homeowners – not just simply raising more taxes for government,” Clark said in a letter to Robertson.

RELATED:Higher tax on luxury home sales urged

Driving down home prices 10 per cent would mean an $800,000 home losing $80,000 in equity and Clark said that could put some residents with large mortgages underwater.

Clark noted local buyers, not foreigners, are responsible for most real estate activity in the region.

“For many individuals and small businesses, this is a source of investment income.”

The premier said the province is actively looking at what it can do.

But she suggested the City of Vancouver can do more itself to address affordability by reducing civic fees and levies that add up to more than $76,000 of the price of a new $450,000 condo.

“Beyond any new taxes to curb demand, there is also the option of increasing supply through better land-use planning,” Clark added.

The B.C. Real Estate Association estimates foreigners account for no more than five per cent of home ownership and real estate activity in the region.

A finance ministry analysis of the issue said Metro Vancouver detached house prices are being driven up largely because of rising demand and shrinking supply, as older houses are knocked down to build townhouses or condos, which have seen much slower appreciation.

B.C. could follow other jurisdictions like Singapore, London and Australia that charge foreigners stiffer property transfer taxes or other taxes. Foreigners also need approval to buy houses in Australia and Singapore, where prices have stabilized but still aren’t considered affordable.

If foreign home buying was sharply pared from the estimated five per cent of Metro home sales now to one per cent, it said, the improvement in first-time buyer affordability would not be significant because of the concentration of offshore buying in high-end homes.

But it estimates such policies would wipe out $1 billion a year in residential real estate sales, causing a 1,400-unit plunge in home building and the loss of 3,800 jobs in the construction and real estate sectors.

“Roughly $350 million in nominal GDP would be lost. This translates into about 0.2 per cent of B.C.’s economy.”

And the ministry warned foreign home buying restrictions could “send mixed messages” to potential business partners and compromise government efforts to welcome foreign investment in other industries, such as LNG.

Even that might not actually reduce home prices, the analysis said, suggesting “drastic measures” targeting both residents and non-residents would be needed to achieve a 10 per cent cut in home prices.

Success would mean erasing $60 billion in home equity across Metro Vancouver, or an average of $85,000 per property, it said.

In addition to more densification, the finance ministry said the federal government could do more to discourage property speculators by taxing their profits as income instead of capital gains in some cases, ensuring capital gains are correctly reported and that flipped investment homes aren’t falsely claimed as primary residences.

The real estate association recommended against any curb on foreign investment in housing but suggested government monitor it by requiring a residency declaration on land transfer forms. B.C. doesn’t track foreign ownership and critics say a lack of data hinders debate on reform.

MoF – Potential Implications of Reducing Foreign Ownership of BC's Housing Market

Just Posted

A tent housing a mobile vaccination clinic. (Interior Health/Contributed)
Second dose vaccinations accelerating throughout region: Interior Health

To date, more than 675,000 doses have been administered throughout the region

Dan Albas
COLUMN: Reopening the international border

Governments in Canada and the United States are working towards reopening plans for the border

Okanagan Lake (File photo)
Thompson-Okanagan ready to welcome back tourists

The Thompson-Okanagan Tourism Association expects this summer to be a busy one

A committee held its first meeting on June 9 to consider opionions for incorporation of the community of Okanagan Falls. At present, Okanagan Falls is the largest unincorporated community within the Regional District of Okanagan-Similkameen. (Contributed)
Study begins for Okanagan Falls incorporation

Committee held first meeting on June 9

A for sale sign is shown in by new homes in Beckwith, Ont., just outside Ottawa, on Wednesday, Jan. 11, 2018. THE CANADIAN PRESS/Sean Kilpatrick
Thompson-Okanagan population grew despite COVID-19: report

The Chartered Professional Accountants of BC said there are 8,462 new residents in the region

People line up to get their COVID-19 vaccine at a vaccination centre, Thursday, June 10, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Vaccines, low COVID case counts increase Father’s Day hope, but risk is still there

Expert says people will have to do their own risk calculus before popping in on Papa

(Black Press Media stock photo)
RCMP name 2015 homicide victim near Creston, investigation ongoing

26-year-old Clint Wolfleg was found dead in a private residence on May 31, 2015

Queen’s counsel Paul Doroshenko, a Vancouver lawyer, has been suspended from practice for two months after admitting that his firm mismanaged $44,353.19 in client trust funds. (Acumen Law)
High-profile B.C. lawyer suspended over $44K in mismanaged client trust funds

Queen’s counsel Paul Doroshenko admits to failing to supervise his staff and find, report the shortage

A GoFundMe campaign has been launched to collect donations ahead of Kristy Handel’s 33-kilometre run for Chelaine McInroy (pictured) to cover costs for a new prosthetic leg after her June 12, 2021, surgery. (GoFundMe)
Friend running to raise funds for Armstrong woman’s new prosthetic leg

33-km Run for Chelaine to help athlete cover medical costs from latest surgery

The Okanagan Eatery owner Chelsea Enns brings with her years of front-of-house and management experience to Vernon’s newest restaurant. (Caitlin Clow - Morning Star)
Vernon’s newest restaurant serves up Okanagan eats

Trio brings passion for locally sourced dishes and smash burgers to the table

House Majority Whip James Clyburn, D-S.C., center left, reaches over to Rep. Maxine Waters, D-Calif., joined by Speaker of the House Nancy Pelosi, D-Calif., center, and members of the Congressional Black Caucus as they celebrate the Juneteenth National Independence Day Act that creates a new federal holiday to commemorate June 19, 1865, when Union soldiers brought the news of freedom to enslaved Black people after the Civil War, at the Capitol in Washington, Thursday, June 17, 2021. It’s the first new federal holiday since Martin Luther King Jr. Day was created in 1983. (AP Photo/J. Scott Applewhite)
Biden to sign bill making Juneteenth a federal holiday

New American stat marks the nation’s end of slavery

The Summerland branch of the Royal Canadian Legion has cancelled its Canada Day celebrations for 2020 because of the ongoing COVID-19 pandemic. (Summerland Review file photo)
Summerland Legion cancels Canada Day events

Pandemic restrictions led to decision on annual celebration

Fire near Highway 97 C close to Merritt. (Facebook)
Wildfire burning near Highway 97C

The fire is an estimated nine hectares in size

Athena and Venus, ready to ride. (Zoe Ducklow - Sooke News Mirror)
Goggling double-dog motorcycle sidecar brings smiles to B.C. commuters

Athena and Venus are all teeth and smiles from their Harley-Davidson sidecar

Most Read