Recent BC Ministry of Finance data for June property transfers indicated only 6 properties went to foreign buyers in Greater Victoria. That compares to 53 last June, for an amazing 89% drop in the number of foreign buyers now that the foreign buyers tax is in full effect.

If the intent was to discourage foreign buyers from purchasing property in Greater Victoria, then the tax seems to have had the intended effect so far. If the intent was to collect substantial revenue it looks like it will fall short. Foreign buyer numbers have been down now for almost a year along with the overall market decline, but the tax has clearly dissuaded all but the most determined from purchasing. Those determined few paid some $600,000 in property transfer tax (which is how the foreign buyers tax is collected) in order to secure their properties.

The percentage of purchases by foreign buyers is similarly way down, from an average of 4.24% in the last two years to only 0.65% of all sales.

The price of properties being purchased by foreign buyers is also down, with the median property only $380,000 compared to $728,000 one year ago. It appears the biggest hit has been to higher end property sales by foreign buyers. Of course the alternative explanation is that those wealthier buyers have moved to purchasing properties inside numbered companies or some other loophole and aren’t being captured as foreign buyers in the provincial statistics. That we won’t know until BC sets up their beneficial ownership registry.

The shift to a lower end property combined with massive drop in sales means that sales volume is down even more dramatically than sales numbers.

In Vancouver we saw a bit of a recovery in foreign buying activity after the market adjusted to the new tax, but we can likely expect that foreign buying activity (which mainly comes from Americans in Victoria) will likely be cut at least in half going forward. Not a huge impact on our overall sales figures, but just another nibble out of the demand side.