Market feels the effects of a new tax

It’s only been a few days since the province brought in an additional property transfer tax for foreign buyers, but early numbers suggest it could have a significant impact on the market.

Overall, residential property sales in Metro Vancouver dropped by 18.9 in July from the previous year, and 26.7 per cent compared to June, according to new numbers from the Real Estate Board of Greater Vancouver.

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Steve Saretsky is a Vancouver realtor and on his blog, he’s compiled sales for the week after the province announced the 15 per cent foreign buyer property transfer tax in Metro Vancouver.

In Burnaby, just three single family homes were sold in the week of July 25 to 31, compared to seven the previous week and 20 the week before that. 

It’s an even bigger drop for attached homes in Burnaby.

There were 15 sales of attached homes in Burnaby in the week of July 25 to 31, compared 55 the previous week and 81 the work before that.

The province’s own stats released last week showed Burnaby was second only to Richmond in the number of foreign buyers in the region, making up 18 per cent of transactions between June 10 and July 14. 

Saretsky suggested the tax is having an impact on the market, but he’s not sure how long that will continue.

“Everyone wants to see what exactly is going to happen next,” he told the NOW.

The realtor said he’s heard of deals falling through because of the tax but has also heard of locals backing out of presale developments because of the uncertainty in the market.

Jenny Wun, principal of West One Real Estate Marketing in Burnaby, has heard that some buyers can’t complete their deals because they can’t come up with the extra 15 per cent, while other buyers have warned they’ll walk away from deals in progress.

“Why not walk away from a five per cent deposit when they can’t come up with 15 per cent,” she said. “It’s one of those things where they’ll be better off not being able to come up with it.”

But the local realtor isn’t convinced the new tax will lead to a drop in the market and instead sees it as giving locals an opportunity to buy in.

Wun noted a lot of foreign buyers were able to outbid locals by coming in with cash in hand or bigger down payments.

“Hopefully local residents will actually realize this is their in on the market since they’ve been pushed out of it and outbid many times,” she said.

While Wun doesn’t expect a big correction in the market, she said there also won’t be as much pressure pushing up home prices.

The benchmark price in July for all residential property in Burnaby north was $778,900, while Burnaby east and south were $858,200 and $869,300 respectively.

The benchmark price for a single-family home in Burnaby north in July was $1.6 million, while Burnaby east and south were $1.25 million and $1.71 million respectively.

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