(Pixabay)

B.C. speculation tax to cause vacation property price dip: forecast

Royal LePage estimates tax on some buyers will convince a wave of owners to sell vacation homes

British Columbia’s new speculation tax on out-of-province buyers will likely convince a wave of owners to sell their vacation properties, pushing down home prices, said a forecast from Royal LePage.

By the end of September, the real estate company is expecting the average price of a recreational home in B.C. to reach $531,333, a 2.8 per cent drop from last year’s average of $546,444.

Under B.C.’s speculation regulations, owners outside the province will be taxed 0.5 per cent this year, but next year will see the rate climb to 2 per cent for foreign investors and 1 per cent for Canadian citizens and permanent residents not living in B.C. but owning properties in the province.

Royal LePage concluded the tax would spark a price dip in B.C.’s recreational housing sector after surveying 200 real estate advisors who specialize in such properties between May 15 and June 1.

About 55 per cent of B.C. respondents said they think the tax will “weaken momentum within the region and keep sales activity from reaching its true potential,” while 40 per cent thought it would impact prices.

Royal LePage chief executive Phil Soper said the tax has already weakened demand for B.C. vacation homes from Albertans, which he considers “the biggest buying cohort outside of the province.”

“You’d think with a strong economy and so much availability, you would see a stronger recreational property market in B.C., but it has been balanced by the recent regulations,” he said.

He and his company also predicted a 0.9 per cent dip in recreational home prices in Manitoba and a 7.5 per cent fall in prices in Atlantic Canada, bringing the average price in the region to $228,754.

Soper said he attributes Manitoba’s expected decrease to an increase in supply, but said he expects it to be a “short-term blip” because Winnipeg has been one of the most stable recreational markets over the last few years.

He said Atlantic Canada’s predicted drop stems from a lot of young graduates — a group that tends to buy homes more fervently — moving out of the province and a boom in people choosing to renovate instead of move.

The country as a whole was expected to fare much better, said Soper and Royal LePage, which is forecasting a 5.8 per cent increase in national recreational home prices. That would bring the average up to $467,764 from $442,239 previously.

Ontario and Alberta could also experience sharp spikes in recreational pricing.

Royal LePage said Ontario recreational home prices will average $535,885, up 10.4 per cent from last year, while Alberta’s will hit $770,100, a 8.9 per cent increase.

Alberta, said Soper, will benefit from an “exodus” of people looking away from B.C. for recreational properties and will see price increases because of improved employment opportunities and strong oil prices that drive activity in the market.

He said that Ontario’s recreational market will be driven by large numbers of people moving into the province and by an expected decrease in inventory levels and an increase in sales activity.

Plus, he said Gen Xers and retiring Baby Boomers, who are increasingly turning to recreational properties as “a reasonable alternative” to their current homes, will also spark a price hike in the market.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

PHOTOS: Spirit of the People Powwow in Chilliwack

Family Day weekend powwow a colourful, vivid celebration of Indigenous culture

How much does your city spend per person on snow removal?

Black Press Media compares 2018 ice and snow removal budgets of various Lower Mainland communities

Lucas Mannes and Calgary Dinos through to Canada West basketball semi-finals

The GW Graham grad helped his Dinos drop the Winnipeg Wesmen in a playoff series last weekend.

B.C. BUDGET: Surplus $374 million after bailouts of BC Hydro, ICBC

Growth projected stronger in 2020, Finance Minister Carole James says

Chilliwack Chiefs end BCHL regular season with meaningless road trip

The regular season champs travel to Prince George this weekend with nothing on the line.

VIDEO: 8 things you need to know about the 2019 B.C. budget

Surplus of $247 million with spending on children, affordability and infrastructure

‘Bullet missed me by an inch’: Man recounts friend’s killing at Kamloops hotel

Penticton man witnessed Summerland resident Rex Gill’s murder in Kamloops

B.C. BUDGET: Income assistance raise still leaves many below poverty line

$50 per month increase included in funding for poverty and homelessness reduction

B.C. BUDGET: Indigenous communities promised billions from gambling

Extended family caregiver pay up 75 per cent to keep kids with relatives

B.C. BUDGET: New benefit increases family tax credits up to 96 per cent

BC Child Opportunity Benefit part of province’s efforts to reduce child poverty

B.C. BUDGET: Carbon tax boosts low-income credits, electric vehicle subsidies

Homeowners can get up to $14,000 for heating, insulation upgrades

B.C. man survives heart attack thanks to Facebook

A Princeton man suffered a heart attack while at an isolated property with no cell service

Abbotsford man sues Maxime Bernier’s People’s Party over trademark

Satinder Dhillon filed application for trademark same day Maxime Bernier announced the new party

New trial ordered over banning whales, dolphins at Vancouver aquarium

Park board’s appeal reverses previous decision that found it had no right to implement a ban

Most Read