After several months of delays, the new foreign buyer numbers are out and we now have a full year of data.
Assuming there isn’t some massive loophole for foreign buyers to avoid detection in this data, two things seem to be clear:
- the percentage of foreign buyer involved transactions in Greater Victoria is more or less steady at just under 5% of transactions
- the foreign buyers tax in Vancouver continues to be effective, pushing the percentage of foreign buyers below that of Victoria.
There is some evidence that foreign investment dollars in Vancouver went into the pre-sale market instead via assignments, but it seems at the very least the resale market seems to be somewhat back in balance (and the government collected a staggering $131 million in additional property transfer tax from foreign buyers).
Taking a look at the actual numbers of transactions, we can see it’s not huge in Victoria at 45 sales/month and the average price is around $750,000 in most months.
Most of those purchases will be concentrated in the core I imagine, but unfortunately the province doesn’t break it down any more finely than the overall region.
Which leaves our local sources of pure demand to fuel the market: first time buyers. They make up about 20% of the market and as of January they’ve been showered with money from the province to fuel the entry level market via the HOME Partnership Program. In fact 1100 applications have been approved which means an extra $13M or so in capital infused into the market. That seems to be having an effect on the Vancouver market with the supply of condos at critically low levels amidst a sales surge.
Here, I think it’s difficult to really notice an effect without digging into the land titles themselves (the BC loan is registered as a second mortgage). Yes condos started selling even faster after January, but that is a normal seasonal effect. Looking at sales, they were strong until March but unlike last year, that was all the market had in it and April/May/June have been flat.
Despite how monumentally dumb it is to stoke an existing hot market, it’s like throwing fire starter on a bonfire: it just won’t make much of a difference anymore. As the head of the CMHC said to the BC architects of this nonsense, “You will know we are holding our noses firmly on this and I would not want any other provinces and territories to be misled into thinking this ill-advised program represents good public policy.”
Let’s hope we’ve seen the end of this kind of pandering politics for a while.