Real estate appears to have largely exhausted the province’s largesse, if last week’s budget is any indication.
Aside from boosting the threshold for exempting first-time homebuyers from the property transfer tax to $500,000 from $475,000, the budget reiterated a series of announcements from recent months to assure B.C. residents that their tax dollars are addressing housing concerns.
Rather than helping people get into the market, the province aims to increase the housing stock, B.C. Finance Minister Mike de Jong said. To this end, the biggest real estate-related number in the budget was the previously announced $920 million pledge to build 5,300 affordable and supportive housing units.
A discreet reference followed to the BC HOME Partnership program, a three-year initiative offering first-time homebuyers loans of up to $37,500 interest-free and payment-free for the first five years. The province estimates the program will help 42,000 households enter the market – many times the 5,300 the province claims will benefit from the new construction it argues is the real focus of its spending.
“Homes must be available to British Columbians,” said de Jong. “They must be affordable.”
Yet just a day before the budget announcement, the Urban Development Institute (UDI) said there’s no chance of that happening in Vancouver in the near future – especially not given recent government initiatives.
UDI’s latest report on the state of the market identifies just 26 concrete highrise condominiums complete and unsold at the end of 2016, the lowest tally in at least five years. The number of projects selling was down 33% from a year earlier, too.
“The report confirms that doing nothing, blaming foreign buyers or introducing new, punitive taxes have not made housing more plentiful or affordable for home-seekers,” UDI president and CEO Anne McMullin said. “Home-seekers can count on prices to keep rising.”
Foreign participation
Speaking of foreign buyers, the latest figures from the province indicate that foreign purchases of real estate stabilized as 2016 came to a close.
The implementation of an additional 15% property transfer tax on foreign purchases of residential real estate initially brought sales volumes to a screeching halt. A slight uptick in foreign purchases followed through the fall, however, as the market acclimatized to the tax.
Regionally, foreign participation in Metro Vancouver stabilized at 4.1% of transactions in November and December 2016. This was down from 14.8% in July 2016 but up from 1% in August.
Within Vancouver, the participation rate was 4.5% in November 2016 and 4.4% in December 2016.
Richmond and Surrey logged the most significant rebounds in foreign participation.
Richmond, which had seen 26.9% foreign participation prior to implementation of the foreign-buyer’s tax, saw foreign buyers involved in 8% of transactions in December 2016 – the most of any Metro Vancouver municipality. This was down from 8.8% in November 2016.
Foreign buyers accounted for 4.2% of Surrey transactions in December 2016 – the greatest proportion since introduction of the tax.
Foreign insights
A visit to Portland, Oregon, last week offered some insights into how residents are taking to the evolution of the vision for the city sketched by former chief planner Gil Kelley, now general manager, planning, urban design and sustainability, here in Vancouver.
The demolition of the older detached homes that embody the character of many neighbourhoods is an issue in Portland as in Vancouver; the slogan “Stop Demolishing Portland” now has its own website.
Ordering a glass on Division Street, I found my server more concerned about the impact of densification on the city’s infrastructure, particularly parking spots.
Believing people would embrace transit and other forms of transportation, the city neglected to mandate sufficient parking in new developments. This has made on-street parking a precious commodity.
The message my server gave Vancouver? Densification will win enemies if infrastructure doesn’t keep pace with the residents it attracts.
