Here’s Vancouver’s latest fixer-upper. At an asking price of $7.888 million it’s probably a teardown.
The home on Vancouver’s west side is yet another example of the city’s red-hot housing market where average prices for homes in many neighbourhoods are above $1 million.
On Tuesday, Finance Minister Mike de Jong said the government considers housing affordability an area of major concern.
British Columbia introduced tax changes in its provincial budget to help buyers and builders of new homes valued up to $750,000, while targeting people able to afford properties priced above $2 million.
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He said the province’s fourth consecutive balanced budget, which has a surplus of $264 million, contains a new housing initiative that exempts payment of property transfer taxes on newly built homes, including condominiums, priced up to $750,000.
The current property transfer tax is set at one per cent on the first $200,000 and two per cent on the remaining price.
De Jong said the exemption will save buyers of a new home $13,000. People who buy older homes will continue to pay the property purchase tax at the current rates.
He said much of the new housing exemption will be funded with the creation of a third tier of property transfer tax. It involves increasing the property transfer tax rate to three per cent on the value of a home over $2 million.
Buyers of property above $2 million will still pay the existing purchase tax rates of one per cent on the first $200,000 and two per cent for homes up to $2 million but the rate rises to three per cent tax on any value above $2 million.
De Jong said the three per cent tax is estimated to raise $75 million annually, the amount the government believes it will need to offset the exemptions for new home buyers.
One academic says the new rules may make things worse.
“Reducing or giving exemption of property transfer tax doesn’t help home buyers,” said SFU professor Andrey Pavlov. “People frame it that way but that’s not how it works. All it’s going to do is raise prices.”
De Jong said buyers will also be required to disclose their citizenship so the government can collect data on who is purchasing property.
“The government stopped collecting data that specifically identified foreign purchasers in 1998,” de Jong said. “We believe there is a legitimate need to resume that process again.”
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Paul Kershaw of UBC’s School of Population and Public Health says further intervention is needed.
“B.C. is drunk on high housing prices. And as Alcoholics Anonymous tells us, the first step in solving a problem is addressing it. At this point we have a government that is not willing to say that the ongoing escalation in housing prices is not a uniformly good thing.”
As for the $7.8-million home on Vancouver’s west side, the price on the property just went up by $78,000. Whoever buys it will now pay $236,000 in property transfer tax, more than the price of an entire home in many parts of Canada.
– With files from Ted Chernecki and The Canadian Press
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