According to the six-page documents from the British Columbia Finance Ministry, the province could be sacrificing $1 billion in residential real estate sales and almost 4,000 construction jobs if the government would implement regulations that would discourage foreigners from investing in the housing market.
The written analysis comes following the proposal in a University of British Columbia (UBC) study that, as previously reported, suggests implementation of a special 1.5 per cent tax on property owners with limited or no residential connection to the province. In turn, that surcharge on residential real estate could yield up to $90 million per year, in Vancouver alone, which then would be dispersed as lump-sum payments to every residents who file taxes in the collecting region. Such proposal aims to address housing affordability.
The proposal also followed the recent decrease in rental-vacancy rates in Vancouver slipped below one per cent last year and the continuously soaring prices of housing unit in the city's west side region. According to Vancouver Sun, this "housing affordability fun" would lessen overseas speculation as B.C. would become less attractive for investors looking to park their cash in residential real estate. Premier Christy Clark has said that the idea is good but might be difficult to implement.
Thus the analysis from British Columbia Finance Ministry has thoroughly looked into the disadvantages of the proposal and, according to CBC Canada, concludes that the proposed special tax that would curb foreign investments would not make so much difference in home values because these foreign investors are only less than five per cent of Vancouver's sales market. The six-page document also stated that if prices drop by 10 percent because of the new policy each Vancouver homeowner could lose about $85,000 in home equity.