Victoria foreign buyer tax would be premature, realtor says

Government should not rush to impose a 15 per cent tax on foreign buyers in Victoria, despite a sudden spike in the number of home sales to non-Canadians, says the head of the Asian Real Estate Association of America's Vancouver chapter.

In the latest figures from the B.C. government, foreign purchases in Victoria rose to 6.3 per cent of real estate sales in the Capital Regional District between Oct. 1 and Oct. 31.

That's up from 3.3 per cent the previous month.

Meanwhile, foreign purchases have dropped sharply in Metro Vancouver since the tax took effect in August.

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Tony Joe told On the Island host Gregor Craigie the statistics reflect a small increase in the actual number of sales.

"We're looking at a differential here of somewhere between 26 sales to foreign investors in one month and 42 or 43 the second month," Joe said.

The NDP's housing critic, David Eby, feels the tax should be extended to Vancouver Island to prevent quickly rising housing costs that occurred in Metro Vancouver. 

"It's going to be the same on south Vancouver Island and the government shouldn't wait until it's a serious problem," the Vancouver-Point Grey MLA said.

But Joe and others, including Oak Bay Mayor Nils Jensen, say more time and more data is needed to determine if foreign investment threatens to skew the real estate market in the Capital Region. 

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"We've always said that Victoria is not necessarily a replacement for the Vancouver market," Joe said.

"Many of the foreign investors who were land-banking and putting their money in Vancouver, they don't see Victoria as a viable alternative. 

"Victoria has other attributes that appeal to people, and major land investment is not one of them," Joe said. 

For foreign home buyers who do purchase on Vancouver Island, Joe said south Oak Bay and Gordon Head are active areas.

Joe said a $600,000 "starter house" he listed last month in Gordon Head attracted 20 offers. While eight buyers had Asian or South Asian names, only one was actually from outside Canada.

Joe said a secondary effect of the tax is that sales of Victoria homes to people from Metro Vancouver have slowed significantly. Before the tax, more home owners in Metro cashed out on the increased value of their homes and moved to Victoria.

"We've seen a lot more younger families come from Vancouver to Victoria," Joe said.

"They're here for the slower pace, the lack of commute and a lot of the people that we served actually were native Victorians that established their businesses or their careers in Vancouver, who just found the opportunity to come back into their home town now."

With files from Megan Thomas

To hear the full interview with Tony Joe go to Victoria foreign buyer tax increase premature, realtor says.