News, Real Estate Market Statistics, Townhouses Vancouver
Will Extending the Foreign Buyers Ban Bring Down Home Costs in Vancouver?
So far, the ban on foreign buyers hasn’t made housing more affordable for Canadians.
About a year ago, Canada’s federal government introduced a foreign buyer ban after passing the Prohibition on the Purchase of Residential Property by Non-Canadians Act in 2022. The two-year ban, which came into effect Jan. 1, barred non-citizens, non-permanent residents and foreign-controlled companies from buying Canadian property for investment.
But what does this mean for Canadian families trying to buy a house? Not a whole lot, it seems.
Although the ban aims to make housing more affordable for Canadians, the latest statistics put the average cost of a townhouse in Vancouver at $1,066,700—up nearly 4.3%, year over year. Critics point out that home prices remain out of reach, and the government should look at how other countries keep homes affordable. Singapore, for example, boasts one the highest home ownership rates in the world in 2022 at 89 per cent and is credited with maintaining property affordable with aggressive speculation taxes—60 per cent compared to BC’s 25.
Earlier this month, the government announced Vancouver would receive $115 million to fast-track the construction of 40,000 homes. Supply has been a key problem, keeping demand high, even when sales drop. Although the government is taking a wait-and-see attitude to their latest round of solutions, Statistics Canada data from 2020, the most recent year on record, showed only about 7 per cent of B.C.’s supply of condominiums were owned by non-residents for investment purposes.
The Canadian Real Estate Association (CREA) noted that even as Canadian home sales fell off in October, the average sale price rose 1.8 per cent that month compared to the same period in 2022. Prices were also up 5.8 per cent in Vancouver, with the benchmark price for a detached home rising to $1,942,400, according to the Real Estate Board of Greater Vancouver (REBGV).
B.C.’s introduction of speculation and vacancy or empty home tax in 2016 helped cool the market and convert more vacant properties into long-term rentals between 2017 and 2021, according to CHMC Canada Mortgage and Housing Corporation data. However, the real factor credited with triggering a market slowdown has been the rising interest rates.
Most people understand the ban is not intended to be a magic bullet to a complex and nuanced problem. Instead, it will be one of many measures the government will use to address Canada’s housing challenges. Other initiatives for making housing more affordable will include the removal of the GST on new purpose-built rentals and providing billions to municipalities to fast-track home builds.
Talk to Vancouver Realtor Ariane Benjamin
Learn more about first-home buyer incentives at visit https://www.canada.ca/en/financial-consumer-agency/services/buying-home.html. You can also contact Vancouver Townhouse realtor Ariane Benjamin at 604-779-1500 for more details about leveraging these incentives when buying a townhouse in Vancouver.