Who pays the Speculation Tax, and How Much?

“Only those who own multiple properties and leave them empty in major cities will be asked to contribute,” said Carol James. “People with cottages at the lake, or cabins, or the islands, will not pay this tax. People with second homes outside of high-cost urban areas will not pay the tax.”

The speculation tax, based on a percentage of property value and to be paid annually, applies to Metro Vancouver, the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission. Have a look at the map provided by the BC Government to see the areas that are impacted.

The highest rate of two per cent of assessed property value will apply to foreign owners. Canadians and permanent residents not living in B.C. will pay one per cent. British Columbians who are Canadians or permanent residents with second homes in major urban centres will pay 0.5 per cent.

Inventory Challenges for Buyers

Buyers still face a market with much less inventory available than the historical average. There were 2,646 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of September 2018. Even though that is a 33.9 per cent improvement over last September (2017), last year’s market inventory was exceptionally low.

Federal and provincial regulations applied to the housing market have certainly slowed down how quickly inventory is moving but it has had negligible impact on the prices of home and condo in Victoria. The Multiple Listing Service® Home Price Index benchmark value for a single-family home in the Victoria Core in September 2018 was $883,700, a 6.2 per cent increase from 2017 when it was $832,000, and down slightly from August 2018 where it was $888,300.

How do you interpret this data if you are searching for a new home?

It can mean longer periods of searching for the right home if you’re looking for a single-family home at or below the Home Price Index benchmark value. Be prepared to make a competitive offer when you spot the house you desire. If you are searching for a 1.5-million-dollar home, the competition is far less fierce. These are general observations as each area is a real estate microcosm with its own market conditions.

"If you are considering buying or selling a home, you need to understand your local market, particularly in the context of your property type and price point," says Victoria Real Estate Board President Kyle Kerr. "Micro markets in our area behave very differently as they are influenced by different pressures.

I can help you establish the right mindset and stamina you will need in your search and advise you on the best strategies for success. I look forward to working with you!

Chart courtesy of Canadian Real Estate Association (CREA) http://creastats.crea.ca/vict