(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

Transit improvements coming to Kelowna regional system

Improvement include the introduction of real-time information

Home away from home for families of KGH patients one step closer to reality

Bid to rezone land for JoeAnna’s House heading to a public hearing Aug. 28

Okanagan winery gets global recognition

Mission Hill is being recognized as having one of the top vineyard designs in the world.

New KGH parking lot approved

New lot would replace parking stalls to be lost with construction of JoeAnna’s House

Kelowna cannabis producer issued Canada sales license

Flowr Group already approved as B.C. marijuana dispensary supplier

A first-hand look at hazards facing scooter users

A Salmon Arm reporter tags along on a mobility scooter tour of the city to learn about safety hazards

Fundraiser set up for family of New Zealand woman who died in Sicamous

Twenty-three-year-old was one of four people to jump from the Bruhn Bridge on Aug. 8

Column: Mother orca’s display of grief sends powerful message

The grief of this orca mother may not be visible anymore, but we must not forget.

Seven people with ties to Red Scorpions gang arrested in B.C. drug bust

Delta police have secured 94 charges against seven people, including drug and firearm offences

Second measles scare this summer at YVR

An infected traveller flew out of Vancouver’s airport three times

Judge OKs Weinstein suit, cites casting couch’s history

Actress Kadian Noble can sue disgraced Hollywood mogul for violating sex trafficking laws

Employers to raise salaries 2.6% on average next year: report

Firm points to factors such possibility of more trade protectionism, rising interest rates

No growth on the Monashee Complex wildfires

Mabel Creek, Sugar Mountain and Harris Creek fires continue to burn near Lumby and Cherryville

PM Trudeau and federal ministers to meet on Vancouver Island

Cabinet retreat will be held in Nanaimo from Aug. 21-23

Most Read