(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

Creston man arrested and charged in 2015 murder

Nathaniel Jessup 32 of Creston has been charged with the second-degree murder of Katherine McAdam and offering an indignity to a body.

Police respond to a suspicious occurrence in West Creston

Police received 112 calls for assistance from May 14 to May 23.

New publisher appointed

Brian Lawrence is returning to the Advance to assume a dual role as publisher/sales manager.

Creston Fire Rescue respond to 11 calls from May 14-May 21

Creston Fire Rescue responded to 11 calls from May 14-21 as reported… Continue reading

Fundraiser planned to support Faulks family

A spaghetti dinner and silent auction will be held in the Creston Hotel banquet room on May 26.

Police say it’s “impressive” no arrests were made after Raptors celebrations

Toronto will play the Western Conference champion Golden State Warriors next

Social media giants in hot seat as politicians consider regulations in Ottawa

Committee members will also grill representatives from Facebook, Twitter

Wildfire crews watching for dangerous wind shift in High Level, Alta.

The Chuckegg Creek fire is raging out of control about three kilometres southwest of the town

UN urges Canada to take more vulnerable Mexican migrants from Central America

The request comes as the United States takes a harder line on its Mexican border

Mistrial declared in Jamie Bacon murder plot trial

Bacon was on trial for counselling to commit the murder of Person X

B.C. VIEWS: Money-laundering melodrama made for TV

Public inquiry staged to point fingers before 2021 election

Canadian homebuyers escaping high housing costs by moving to secondary cities

In British Columbia, exurbs have grown in the Hope Valley and Kamloops

Feds lay out proposed new rules for voice, video recorders in locomotives

Transport Canada wants to limit use of recorders to if a crew’s actions led to a crash

Most Read