Foreign and first-time buyers driven out of B.C. market
August 3, 2022
Photo credit: Fbuyer house
Foreign homebuyers stayed on the sidelines in B.C. during the two-year sales surge that started in April of 2020, and many first-time buyers fled Canada’s most expensive housing market during the first half of 2022.
The latest property transfer tax data released by the BC Ministry of Finance shows foreign buyers accounted for 1 per cent of residential sales in June 2022—a record low. This is consistent with a downward trend seen even before the pandemic when international borders were shut to foreign travellers and potential purchasers.
The proportion of residential transactions with foreign involvement has not been above 1.5 per cent since July 2020 nor has the proportion been consistently above 2 per cent since April 2019.
This low level of activity is a shift from July 2016 when the province reported that foreign nationals were involved in 9 per cent of residential transactions and began charging those buyers an additional property transfer tax of 15 per cent based on transaction value.
Popularly known as the foreign homebuyers’ tax, it had a chilling effect on out-of-country buyers. Foreign-buyer transactions fell to 1.4 per cent of all residential sales in August 2016 before normalizing to a level of 3 to 4 per cent for the duration of 2017. When the new BC NDP government raised this additional tax to 20 per cent in February 2018, the transaction rate fell below 3 per cent and stayed there—even as housing sales and prices surged to record levels from 2020 to 2022.
The higher prices forced many first-time buyers out of the B.C. market. During the first half of 2022, the number of first-time buyers plunged 46 per cent from a year earlier to 4,426 residential transactions, the Finance Ministry reported.