Canada’s ban on foreign homebuyers is only a few weeks old, but it’s unlikely to have an effect on the housing market, in Richmond at least.
That’s the opinion of Richmond realtor Johnson Lai, who said B.C.’s much more established speculation and vacancy tax and the pandemic all but killed off foreign interest in local property.
Lai, who has worked for Macdonald Realty in Richmond for four years, said he used to deal with a very small percentage of offshore buyers prior to covid in 2020, when global travel restrictions halted such sales activity.
But he added that, even before the pandemic, the introduction of the province’s speculation tax - two per cent of a property's assessed value for foreign homeowners – scared off most foreign interest in Richmond’s real estate market.
“It has only been a few weeks (since Canada’s ban) and right now we’re not seeing a lot of changes to the market,” Lai told the Richmond News.
“For the past few years, because of covid, we didn’t have many foreigners coming into the market, but (the market) was still red hot.
“And that was despite foreigners being banned from entering the country because of covid.”
Prospective buyers, added Lai, still have to come to Canada in person to complete the sale.
“We have to do our due diligence, we need to see them in person, because of money-laundering and FINTRAC…we’re legally obligated to meet them in person,” he said.
Speculation tax all but killed off foreign investors in B.C. housing market: Richmond realtor
Lai said B.C.’s speculation and vacancy tax affected the local markets more than anything.
“That filtered out a lot of prospective buyers. So I think that’s why the ban won’t have much effect. The tax already stopped so many investors from coming.
“When they learned of the tax, they backed off. A lot of millennials, people with work visas for example, they’re not willing to pay (the tax), they might wait until they get residency or citizenship.
“There are still a few people out there willing to pay it, but only the super-rich, who don’t really care.”
Lai said there was a small flurry of enquiries from offshore in December, as the new ban loomed, but it didn’t amount to much.
Adding more supply is what’s needed to help the market, he said, noting that “much more immigration is coming into Canada and we simply need more supply on the market.
“Supply and demand is a bigger problem than foreign buyers. And the rental prices are crazy as well.
“I don’t know how the younger generations coming through can afford to live in the cities.”
Canada’s ban on foreign homebuyers is now in effect, barring commercial enterprises and individuals outside of Canada from buying residential properties in the country.
The ban was passed by Parliament in June of last year and officially began on Jan. 1 and will remain in place for two years.
