Why It May Cost More to Buy a Home in Canada

The housing market in Vancouver Canada is booming. According to Teranet-National Bank Composite House Price Index, housing pricing in Vancouver are up 23% from 2015. Couple that with extremely low inventory and significant demand, it isn’t uncommon for sellers to receive 10+ offers on their listing.

Source: Tourism Vancouver

That high demand isn’t just coming from domestic buyers, there are tons of foreign buyers looking to purchase real estate in Vancouver. Some folks are looking to emigrate while others are looking to stash their cash in an out of country safe haven. This surge in price and demand means that affordable housing has become pretty elusive and as a result many middle class families found themselves excluded from the house hunt.

Source: Hilla Law Firm

As a result of the housing crunch, 2016 Vancouver passed legislature that would impose a 15% property transfer tax on foreign buyers purchasing property in the Canadian city. According to Jason Soprovich, a luxury real estate agent in Vancouver, “It was almost a knee-jerk reaction from the government,” as the housing market was just beginning to enter a cooling cycle as the tax was imposed. Further, it is important to note that the new tax worked retroactively, impacting foreign buyers who were already in escrow at the time the law was passed. No one line to see their purchase get 15% more expensive after the transaction was agreed upon.

While the recent tax hike is giving many foreign buyers pause for future purchases, for domestic buyers, it pays to be Canadian.