B.C. Premier Christy Clark responded Thursday to calls for government action to address rapidly rising real estate prices.

B.C. Premier Christy Clark responded Thursday to calls for government action to address rapidly rising real estate prices.

Premier Clark fires back on real estate tax demands

Finance ministry says policies to slow home buying by foreigners would deal economic blow, provide little benefit

Premier Christy Clark has issued a warning that demands for new taxes to rein in rising real estate prices could have serious undesired effects and are largely rooted in mistaken perceptions.

She was responding to a call from Vancouver Mayor Gregor Robertson for the province to charge a higher Property Transfer Tax on the most expensive properties, create a speculation tax on short-term flippers, and give cities more power to track ownership and discourage the practice of leaving investment homes vacant.

“It’s important that we consider any actions carefully to make sure we are helping first-time homebuyers get into the market while protecting the equity of existing homeowners – not just simply raising more taxes for government,” Clark said in a letter to Robertson.

RELATED:Higher tax on luxury home sales urged

Driving down home prices 10 per cent would mean an $800,000 home losing $80,000 in equity and Clark said that could put some residents with large mortgages underwater.

Clark noted local buyers, not foreigners, are responsible for most real estate activity in the region.

“For many individuals and small businesses, this is a source of investment income.”

The premier said the province is actively looking at what it can do.

But she suggested the City of Vancouver can do more itself to address affordability by reducing civic fees and levies that add up to more than $76,000 of the price of a new $450,000 condo.

“Beyond any new taxes to curb demand, there is also the option of increasing supply through better land-use planning,” Clark added.

The B.C. Real Estate Association estimates foreigners account for no more than five per cent of home ownership and real estate activity in the region.

A finance ministry analysis of the issue said Metro Vancouver detached house prices are being driven up largely because of rising demand and shrinking supply, as older houses are knocked down to build townhouses or condos, which have seen much slower appreciation.

B.C. could follow other jurisdictions like Singapore, London and Australia that charge foreigners stiffer property transfer taxes or other taxes. Foreigners also need approval to buy houses in Australia and Singapore, where prices have stabilized but still aren’t considered affordable.

If foreign home buying was sharply pared from the estimated five per cent of Metro home sales now to one per cent, it said, the improvement in first-time buyer affordability would not be significant because of the concentration of offshore buying in high-end homes.

But it estimates such policies would wipe out $1 billion a year in residential real estate sales, causing a 1,400-unit plunge in home building and the loss of 3,800 jobs in the construction and real estate sectors.

“Roughly $350 million in nominal GDP would be lost. This translates into about 0.2 per cent of B.C.’s economy.”

And the ministry warned foreign home buying restrictions could “send mixed messages” to potential business partners and compromise government efforts to welcome foreign investment in other industries, such as LNG.

Even that might not actually reduce home prices, the analysis said, suggesting “drastic measures” targeting both residents and non-residents would be needed to achieve a 10 per cent cut in home prices.

Success would mean erasing $60 billion in home equity across Metro Vancouver, or an average of $85,000 per property, it said.

In addition to more densification, the finance ministry said the federal government could do more to discourage property speculators by taxing their profits as income instead of capital gains in some cases, ensuring capital gains are correctly reported and that flipped investment homes aren’t falsely claimed as primary residences.

The real estate association recommended against any curb on foreign investment in housing but suggested government monitor it by requiring a residency declaration on land transfer forms. B.C. doesn’t track foreign ownership and critics say a lack of data hinders debate on reform.

MoF – Potential Implications of Reducing Foreign Ownership of BC's Housing Market

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

West Shore RCMP is asking for the public’s help in locating Mackenzie Courchene, a Langford teenager.
MISSING: Mackenzie Courchene last seen in Langford on March 2

West Shore RCMP is asking for the public’s help in locating the Langford teenager

Rendering of the proposed Esquimalt public safety building. (Courtesy Township of Esquimalt)
Esquimalt blazes new trail toward modern public safety building

Township using alternative approval process for first time to gauge public support for proposal

Landmarks such as Howard the giant gnome at Galey's Farm in Saanich make a stunning backdrop for celebratory dance in the Greater Victoria Festival Society trailer for its coming Dance Victoria campaign. (Screeshot/Greater Victoria Festival Society)
Residents’ videos help campaign Dance Across Victoria

Celebratory dance clips to be compiled into Greater Victoria Festival Society video

Reynolds Secondary School’s spring musical Freaky Friday features Grace Fouracre as teen Ellie Blake (left) who swaps bodies with her overworked mother, Katherine, played by Nadia Lurie. (Photo courtesy Reynolds Secondary School)
Saanich high school goes virtual with Freaky Friday musical

Reynolds Secondary theatre program to livestream performances March 9-12

Saanich Fire Department. Black Press Media File Photo
Fire displaces three Saanich families from two homes

Saanich firefighters found the fire had spread to a neighbouring home upon arriving

Elvira D’Angelo, 92, waits to receive her COVID-19 vaccination shot at a clinic in Montreal, Sunday, March 7, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
‘It’s been a good week’: Tam hopeful on vaccines as pandemic anniversary nears

Tam says the addition of two new vaccines will help Canadians get immunized faster

Const. Allan Young. Photo: Abbotsford Police Department
Manslaughter charge laid in Nelson death of Abbotsford police officer

Allan Young died after an incident in downtown Nelson last summer

(The Canadian Press)
‘Worse than Sept. 11, SARS and financial crisis combined’: Tourism industry in crisis

Travel services saw the biggest drop in active businesses with 31 per cent fewer firms operating

The Port Alice pulp mill has been dormant since 2015. (North Island Gazette file photo)
Parts recycled, life returning to inlet as as old Port Alice mill decommissioned

Bankruptcy company oversees de-risking the site, water treatment and environmental monitoring

The Conservation Officers Service is warning aquarium users after invasive and potentially destructive mussels were found in moss balls from a pet store. (BC Conservation Officers Service/Facebook)
Aquarium users in B.C. warned after invasive mussels found at pet store

Conservation officers were told the mussels were found in a moss ball from a Terrace pet store.

Hockey hall-of-fame legend Wayne Gretzky, right, watches the casket of his father, Walter Gretzky, as it is carried from the church during a funeral service in Brantford, Ont., Saturday, March 6, 2021. HE CANADIAN PRESS/Nathan Denette
Walter Gretzky remembered as a man with a ‘heart of gold’ at funeral

The famous hockey father died Thursday at age 82 after battling Parkinson’s disease

Donald Alan Sweet was once an all star CFL kicker who played for the Montreal Alouettes and Montreal Concordes over a 13-year career. Photo courtesy of Mission RCMP.
Ex-B.C. teacher who was CFL kicker charged with assault, sexual crimes against former students

Donald Sweet taught in Mission School District for 10 years, investigators seek further witnesses

(Black Press Media files)
Medicine gardens help Victoria’s Indigenous kids in care stay culturally connected

Traditional plants brought to the homes of Indigenous kids amid the COVID-19 pandemic

Most Read