The City of Victoria is requesting the BC government implement a foreign homebuyer tax in the city, like the one introduced in Metro Vancouver last year.
On Thursday, Victoria’s city council voted in favour of asking the province to immediately place a non-resident speculation surtax for the city or the Capital region, whichever the province decides is most expedient.
“We all know that we have a housing crisis and that the cost of homeownership and rent is getting higher and higher and the dream of homeownership is getting further and further away from many of our residents,” says Victoria City Councillor Jeremy Loveday at the city’s Committee of the Whole meeting.
“And this is asking for action to be taken so that our residents can afford homes here.”
The vote happened on the heels of the Ontario government’s announcement of a 15 per cent non-resident speculation tax for the Greater Golden Horseshoe area.
Victoria City Councillor Geoff Young voted against the tax, saying its ramifications could be similar to those of the Chinese Head Tax, established in Canada between 1885 and 1923.
“I really think we may end up being seen to be on the wrong side of history on this one,” says Young.
Victoria Mayor Lisa Helps made it clear that this tax would mirror Ontario’s legislation on the matter, concentrating on speculators in the market.
“I wouldn’t want to be seen as a place where people from either China, or the United States or Israel or anywhere else aren’t welcome to come and live here,” says Helps. “This does not talk about that, this is a speculative tax,” she adds.
According to the BCREA, the average price of a home in Victoria was $640,802 last month, up 11.3 per cent compared to March 2016.
BMO Senior Economist Sal Guatieri tells BuzzBuzzNews the tax in Victoria might provide a temporary cooling effect on the housing market.
“It might have the same impact as we saw in Metro Vancouver where price growth did cool for a good six months or so but now appears to be picking up again,” says Guatieri.
President and CEO of Sotheby’s International Realty Canada Brad Henderson argues the tax will have a minimal effect on Victoria’s market, as foreign buyers account for a small fraction of purchasers compared to the number of domestic buyers.
“If those that are speculators withdrawal, it really is going to have a very modest effect on supply and demand,” Henderson tells BuzzBuzzNews.
If the provincial government does enact a tax in Victoria, BMO’s Guatieri says many will be keeping a close eye on the market over the next couple of months.
“We will have Toronto and now perhaps Victoria to give us a broader test of the efficacy of the foreign buyers tax,” says Guatieri.