How the 15% Property Transfer Tax on Foreign Nationals Affects Port Alberni
It seems that everywhere I turn these days someone is asking my opinion about how the new 15% property transfer tax on foreign nationals, corporations and trusts that are buying in Metro Vancouver will affect the Port Alberni real estate market.
I’ll begin by making clear that as of today this tax applies only to the Metro Vancouver area, it does not apply to Vancouver Island. Therefore it has no direct impact.
Indirectly, there may be an impact on our market. I was speaking to a Realtor working for clients selling in Metro Vancouver this morning, and he told me that the market there has slowed down considerably since the tax was introduced. Given that approximately 12% of our buyer in the Alberni Valley our coming from Vancouver right now, you can see how a slowdown in Vancouver could affect Port Alberni. However, I suspect that the slowdown in Vancouver is only temporary, as the market pauses to see how this all shakes out. If you consider that only around 5% of buyers in the Metro Vancouver area are foreign, you see that the foreign investor has not been driving the market as much as is commonly thought.
There is precedent to suggest that this new tax won’t have a major slowing effect on the Metro Vancouver market. The United Kingdom passed similar legislation to slow growth in the London real estate market with no major effect.
We then have to consider if the foreign investors who had been considering Vancouver will now turn their sights to Victoria or Nanaimo, which plausibly could have a domino effect on Vancouver Island. This is possible, and will likely happen to some extent. However, we must consider that these foreign investors may just as easily set their sights on Toronto, Calgary or Montreal. For the sake of argument, let’s pretend that they do begin buying on the island in droves. The BC Government has not rules out the possibility of extending the 15% tax to other BC communities if the need arises (in their estimation).
I’ll finish by saying I’m not an economist, I’m simply a Realtor with a basic understanding of economics, but in my estimation over the medium to long term, I don’t feel like this new tax will have any lasting effect on the Port Alberni real estate market.