(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

UPDATE: Castlegar brush fire human caused

RCMP are investigating the fire.

PHOTOS: Castlegar grads on parade

Stanley Humphries Secondary School celebrated grad last weekend.

Commercial truck caught dumping waste into river near Trail

Greater Trail RCMP report the company owner has been identified

Teck will continue to fight U.S. judgement

U.S. Supreme Court denied hearing Teck’s appeal last week

Castlegar residents encouraged to water smarter

Water Smart Ambassador will come to your home for a free assessment.

VIDEO: ‘Avengers: Endgame’ to be re-released with new footage

‘Avatar’ holds global box office record at $2.788 billion, while ‘Endgame’ stands at $2.743 billion…

B.C. teen killed by falling tree near Victoria

Second youth also injured in freak incident during field trip at Camp Barnard near Sooke

Elias Pettersson wins Calder Trophy as NHL’s top rookie

Vancouver forward first Canuck to win award since Pavel Bure in 1992

FVRD chair calls B.C. incineration plan for Philippines waste ‘disturbing’

Metro Vancouver ‘uniquely capable’ of safely disposing of waste coming back to Canada, say officials

VIDEO: Acknowledging skeptics, finance minister vows to build Trans Mountain project

Bill Morneau said he recognizes ‘huge amount of anxiety’ in Calgary over future of oil and gas sector

Shovels could be in the ground on Trans Mountain by September, CEO says

Ian Anderson points to weeks likely required for NEB to reinstate 2016 regulatory record

Scorpion gives birth after hitching ride in B.C. woman’s luggage

A Vancouver woman inadvertently brought the animal home from a trip to Cuba

RCMP allows officers to grow beards

Members can now wear beards and goatees, as long as they’re neatly groomed

Girl, 10, poisoned by carbon monoxide at B.C. campsite could soon return home

Lucille Beaurain died and daughter Micaela Walton, 10, was rushed to B.C. Children’s Hospital on May 18

Most Read