Effects of the New Regulation Changes



Proceeding the new Regulation changes applied to the BC Real Estate market, prices are still remaining high while the detached transactions in the Vancouver region dropped by 9% in the last month (Feb 2018). That being said, the full impact is yet to be felt for the new residential taxes levied by the B.C. government. 
According to the Globe and Mail, while industry experts caution against reading too much into February's statistics, they say the cumulative impact of the tax measures will be seen in the months ahead as the market enters the traditionally busy spring season for real estate.

As you all may know, one of the most important measures in the B.C. budget was the introduction of what the government is calling a speculation tax. It is aimed at foreign and domestic property owners who are parking capital in real estate and driving up prices in the province. It would apply to owners who do not pay income tax in British Columbia. Principal residences are exempt, as are properties with long-term renters. 
According to the B.C. Finance Minister, Carole James, a typical vacation home that is used several times a year but is otherwise empty would not be exempt. "If you are from outside the province and you leave your home vacant, you will be taxed,"

A notable tax measure that industry experts say will likely cool off the higher-end housing market is an increase in the property transfer tax. Historically, PTT was introduced in 1987 by the Social Credit government at the time : 
On the initial $200,000 of the purchase price, the home buyer forked over 1 per cent and then paid a 2-per-cent tax rate on the remaining balance.That formula remained untouched until February, 2016, when the BC Liberals unveiled a new calculation in what they portrayed as higher taxes on luxury properties. In its budget explanation, the BC NDP raised the rates for what it terms "high-value" homes. 
The 1-per-cent rate still applies on the first $200,000. A 2-per-cent rate kicks in on the portion between $200,000 and $2-million, 3 per cent on the part between $2-million and $3-million, with the NDP increasing the rate on the portion above $3-million to 5 per cent from the previous 3 per cent.
On a $3.5-million purchase, for example, the property transfer tax totals $93,000. In addition, if it's a foreign buyer, that purchase will be subject to $700,000 in foreign-buyers tax, which rose from 15 per cent to 20 per cent, effective Feb. 21.

Statistics Summary:
February sales of detached houses, condos and townhouses totalled 2,207 in Greater Vancouver, compared with 2,424 transactions for the same month in 2017.
The average price for condos sold in the region hit $750,052 last month, up 24.2 per cent from a year earlier and just shy of the record $751,358 in January. 
The average price for town-homes reached a new high at $938,805 last month, up 13.4 per cent from February, 2017. 
The price for detached houses, by contrast, slipped 1.2 per cent over the past year to an average of $1,737,030, the Real Estate Board of Greater Vancouver said on Friday.
Sales volume for detached houses saw the biggest decline as 621 properties changed hands last month, down 16.6 per cent from a year earlier. 
Over the past year, condo sales fell 7.1 per cent to 1,185 deals in February, while town-home sales slipped 0.7 per cent to 401 transactions in the Vancouver area.Last month's sales of detached properties rang in 39.4 per cent lower than the 10-year average for the month of February.  
Article from: The Globe and Mail
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