Connect Wealth | 13-2970 King George Blvd. | South Surrey, BC V4P 0E6, Canada
Phone: 604.542.4298 | Toll Free: 877.542.4298 | Fax: 604.542.4289
For almost 20 years (in the Lower Mainland especially) real estate has been a pretty sure thing. Many people we’ve talked to over the years have said that real estate is a guaranteed money maker. In most areas of BC this may have been true; ask the people of Detroit and they may think otherwise. Recently, we have seen a softening of the real estate market. So what seems to be driving this softer market?
1. Increase in Interest Rates – The Bank of Canada has increased interest rates over the last year and they are expected to continue this upward trend.
2. Restrictions in Lending Rules – The Federal Government introduced legislation on the lending rules for Canadian banks and credit unions. This reduced borrowing power in some instances by 18%. (Read more about Financial Stress Test: New Mortgages Rules here!)
3. Foreign Buyers Tax – There had been some speculation that foreign buyers were distorting the BC real estate market. As result, BC Government introduced a 15% tax on foreign buyers.
4. Speculation Tax – In strong real estate areas (such as the GVRD, Kelowna, West Kelowna, Victoria and the Fraser Valley) BC introduced a tax on empty properties or properties that are rented for less than 30 days at a time. This tax is 0.5% if you live in BC, 1% if you live in the rest of Canada and 2% if you are a foreign buyer.*
5. Rent Controls – The BC government recently made it more difficult for landlords to increase rent in BC.
The result: the market has softened in BC and in other parts of Canada as well. Depending on the area, prices have dropped more than 5%.
If you have any questions on how these changes may affect your financial future, do not hesitate to contact us!
According to the government’s calculations is that less than one per cent of British Columbians who pay income tax in the province will be hit by the tax.
“Over 99% of British Columbians will not pay the tax…only those who own multiple properties and leave them vacant in major cities will be asked to contribute… The tax is intended to improve housing affordability in areas where the need is most acute, while exempting rural cabins and vacation homes.” – Carole James, B.C. Finance Minister
Follow the chart to see if the new BC Speculation Tax applies to you. This tax is applicable to all Canadian’s and Permanent Residents who live in BC.