I really really really really really (Ok. I think I’ve emphasized enough haha) love reading Real Estate related news!
Here are the top 5 Real Estate News I read in January:
1. BC Foreign Property Tax Introduced
In September 2016, BC Foreign Property Tax was introduced. The impact can be seen from the graph below, depicted by the Globe and Mail in their article here.
2. BC Foreign Property Tax lifted for Work Permit Holders
Christy Clark announced sometime last week that foreigners with work permits in BC will be exempted from the hefty 15% property tax that was implemented last year August.
It is definitely a big relief for international students who are looking to contribute to Vancouver Hot Housing Market. According to Vancouver Sun, there is a significant drop in real estate transactions last year in November after the tax was introduced, compared to 7 weeks ago before the foreign tax implementation. In November 2016, there were approximately 204 transactions whereas 7 weeks ago, we are looking at 1974 transactions!
Seeing the significant drop of transactions after the foreign property tax was introduced, I forecast that the foreign property tax lift will tremendously increase the number of real estate transactions, balancing out the plunge in November. Let’s see…
3. China’s Stringent Capital Control
With Yuan depreciating, China is clamping down overseas investment. China recently implemented a new yuan currency exchange rule – all financial institutions must report all domestic and overseas cash transactions of 50,000 yuan (CAD $9447.15) from the previous $200,000 (CAD $37908.60).
The stringent currency exchange rule means it will be tougher for the local Chinese to get rid of their yuan/RMB and invest in USD/CAD. But that being said, I think the Chinese will take no matter what it takes to get their money and investments out of China (even if they have to exchange their funds slowly). After all, nobody wants to invest in a dying stock nonetheless depreciating yuan is not a good sign. Unless China strengthens its currency, despite its capital control attempt, the locals will still try.all.their.might. to not be at the losing end.
China’s Capital Control might be a good sign for the housing market in BC. If I were a local in China, I’d be wrecking havoc trying to get my money out as quickly as I can. If things are doing well in my city, why would they try to limit my currency exchange activity? I see this as a formidable sign that the yuan is deteriorating and thus signals instability.
Cad / Yuen Graph Comparison in 2016
And with Trump building his “Great Wall of America”… Canada is the next safe haven for many.
4. First Time Home Buyers’ Reduced / $0 Property Tax
Applications opened a few weeks ago on January 16 and end March 31, 2020.
Few things to note (Learn more here):
- Applicants must be Canadian Citizens / Permanent Residents*
- Applicants must have a gross household income of <$150,000.
- Tax payable is $0 if your property is <=$475,000.
- If you are purchasing a property with someone who is illegible, you could be partially exempted.
Here’s what you get (approximately) in Downtown Vancouver, E Hastings, Burnaby (Metrotown), West Vancouver, North Vancouver, Coquitlam and Delta with $475,000:
|City||Address||Unit Size||$/sq.ft.||Age||List Price|
|Downtown Vancouver||1050 Burrard Street||0 Bed 1 Bath||426 sf||$1103||23||$469,900|
|E. Hastings||138 E Hastings St||1 Bed 1 Bath||440 sf||$852||1||$375,000|
|Burnaby (Metrotown)||6759 Willingdon Avenue||1 Bed 1 Bath||651 sf||$535||40||$348,000|
|North Vancouver||365 East 1st Street||1 Bed 1 Bath||715 sf||$622||18||$445,000|
|West Vancouver||235 Keith Road||1 Bed 1 Bath||710 sf||$669||49||$475,000|
|Coquitlam||the High Street||2 Beds 2 Baths||805 sf||$581||5||$468,000|
|Delta||5555 13a Avenue||2 Beds 2 Baths||880 sf||$533||21||$469,000|
5. First Time Home Buyers’ Loan Program
First time home buyers (Canadians / PRs*) are eligible for a maximum loan of $37,500 plus no monthly interest for the first 5 years.
Will this increase high debt risk or provide an opportunity for millennials to own a place? I am really curious to hear what you think because I can’t decide without a backup evidence and I think this has to be for another post as it will be a rather substantial topic…
*Permanent Residents of Canada must reside in Canada for the past 5 years and BC for the past year.