Foreign buyer tax hits detached sales in GTA, Metro Vancouver
August 15, 2017
The introduction of a foreign home buyer tax helped to drive down sales of resale detached housing in both Greater Toronto and Metro Vancouver, but the effect on Vancouver is easing one year after the tax was introduced while the tax has had minimal impact on Toronto’s overall new home sales.
In the Greater Toronto Area (GTA), where a 15 per cent foreign buyer tax was introduced in April, July detached house sales were down 49 per cent from a year earlier with average prices up 5 per cent in the same period, according to the Toronto Real Estate Board.
Bank of Montreal economist Sal Guatieri said that detached home prices are falling faster in Greater Toronto than they did in Metro Vancouver after B.C. introduced the foreign buyer tax in August 2016. He noted average resale detached house prices in the GTA are down about 19 per cent from the April peak of $920,791.
Ontario’s foreign buyer tax was introduced with a number of other measures that have also helped to cool overall housing sales, analysts note.
The tax appears to have had little effect on new home sales in the GTA, which were up 14 per cent through the first half of this year, compared to 2016, according to the Building Industry and Land Development Association (BILD).
“We continue to see that the Province’s fair housing plan in effect since April has had little impact on the new home market,” said BILD President and CEO Bryan Tuckey.
However, only one of out every four new homes selling in the GTA as of June was a detached house.
In Metro Vancouver, the effect of the foreign home buyer tax has apparently been muted. As of July, overall housing sales were 0.7 per cent higher than in July 2016 and the benchmark home price in Metro Vancouver hit a record high of more than $1 million in July. Sales of detached houses, considered the most popular purchase by foreign buyers, were down 11.9 per cent from July 2016. The benchmark price of a detached house is now $1.6 million, up 1.9 per cent from July 2016 (a month before the foreign tax was introduced).