VANCOUVER Oct 19 A tax on foreign buyers aimed
at cooling Canada's priciest property market has forced some
developers and builders of detached Vancouver homes to hit the
pause button, but has had much less effect on the city's
condominium market, according to industry players.
Vancouver home sales in September were down by about a third
from a year earlier after British Columbia implemented the new
15 percent tax in August. The tax was put in place in Vancouver
because surging prices prompted worries about a bubble and
speculation by foreigners, mostly from China.
In a city where million-dollar homes have been torn down to
clear way for new ones that are even more expensive, some
builders say the tax and other measures are shrinking order
books and threatening jobs.
"I have lost two homes, at least, based on the government's
latest ruling," said Larry Clay, founder of Clay Construction.
Clay said a developer who had lined up the company to build
two 4,500-square-foot homes near Vancouver instead decided to
rent out one property and look for a cheaper builder for the
other, on concerns slumping sales would hit prices.
Sales of yet-to-be-built detached homes at developer
Morningstar's new 68-lot development in Maple Ridge, a bedroom
community east of Vancouver, have dried up completely in recent
weeks after 12 initial sales, said Ron Rapp, vice-president of
construction at Morningstar.
The trend was highlighted by data from the province's
Homeowner Protection Office (HPO), where new homes must be
registered before building permits are issued or construction
starts. The Vancouver area accounts for three-quarters of the
Registrations of new detached homes fell 24 percent
month-on-month in British Columbia in September, the biggest
fall in 20 months. Year-on-year the fall was 1.5 percent, the
only decline so far this year.
The data is a strong indicator of construction activity
three to nine months out, said Robert de Wit, chief executive of
the Greater Vancouver Home Builders' Association.
CONDO BUILDING PROVES RESILIENT
Separately, the HPO data showed registered multi-unit homes
rose by 17.6 percent month-on-month in September and by 27.1
New condo projects continue to sell quickly in urban
centers, and marketing firms have indicated that buyer
registrations are high even for those that have not yet
launched, said Michael Ferreira, managing principal at Urban
Analytics, a condo market research firm.
"The challenges we have is still significant demand and very
little supply," said Ferreira, blaming a shortage of development
sites and long timelines for getting municipal approvals.
Condos are generally cheaper than houses in a market where
the benchmark home price is C$931,900 ($711,000). But even some
luxury properties have done well.
A 26-story, 119-luxury unit Vancouver project launched two
weeks after the foreign buyer tax was announced set a record of
C$1,800 for average price per square foot, said Daryl Simpson,
senior vice president at developer Bosa Properties.
"We are still very confident in this marketplace. We have a
number of plans that will be developed over the coming years,"
But detached home builders noted shifting to the condominium
market would not be easy. Clay said previously signed projects
should keep his company busy for the next 12 months, but he
worries about further out.
"What's it going to be like in a year when this lull works
its way through to the custom builders? We're going to be laying
people off," he said.
($1 = 1.3114 Canadian dollars)
(Reporting by Nicole Mordant in Vancouver; Editing by Will