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Blog by Kevin Wong

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Lack of HST Transitional Rules Is Affecting Real Estate

A panel of real estate industry experts, including the Real Estate Board of Greater Vancouver’s President-Elect Eugen Klein, spoke at a recent Board of Trade event, citing a lack of clear transitional rules leading up to the return of the provincial sales tax is having a negative effect on the real estate industry.

Other panelists in agreement included Ward McAllister, president of Ledingham McAllister Properties, and Richard Wozny, of Site Economics Ltd. The panel was moderated by David Podmore, CEO of Concert Properties Ltd.

Excerpt:

“Potential buyers, especially the under-25 group, are sitting on the sidelines,” said Klein. “It’s also affecting home renovation projects with HST on them because consumers don’t know what to do.”

McAllister was the most vocal in his criticisms, noting that he and his company have been “literally begging” the provincial government for transitional rules since the results of the referendum to repeal the HST were announced.

“What is amazing to me is that it took the government three days to bring this new tax in and now they are telling us it is going to take up to 18 months to unravel,” said McAllister. “This is really hurting us in the new home business just because of the uncertainty.”

Both Klein and McAllister noted that they are seeing developers taking on a portion, or even all, of the HST on their product to try and remove that uncertainty for potential buyers.

Wozny forecasted that low interest rates will hold steady into the foreseeable future, which will translate into continuing sales, and McAllister highlighted immigration data that shows that approximately 52,700 immigrants will move to British Columbia in 2011. Of that total, some 42,000 will move into the Metro Vancouver area, meaning that the need for new housing will remain strong.

Klein pointed to steady residential sales driven by high-end property demand in Richmond, West Vancouver and the Westside of Vancouver. He also updated major commercial projects that will add approximately five million square feet of retail space and 1.5 million square feet of office space to Metro Vancouver by 2015.

“Putting the residential and commercial real estate sectors in perspective, the Lower Mainland remains a very desirable place to live and work,” said Klein.