Lack of HST Transitional Rules, Not A "Bubble", Is Affecting Vancouver Real Estate
There is no real estate bubble in Vancouver but, according to a panel of speakers at a recent Board of Trade event, 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.
That was the message delivered by the panel of three real estate industry experts, including the Board’s President-Elect Eugen Klein, to a packed house at the Board of Trade’s Bubble Trouble event on October 21 at the Fairmont Hotel in Vancouver.
Other panelists 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.
Lack of Tax Transition Rules
Each of the speakers presented information that helped to set the overall picture of what they consider to be a solid overall market that is not in the midst of a bubble. But they directed their strongest comments towards the impact that the lack of transitional rules is having on the market right now.
“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.
Healthy, Stable Market
Other information provided by the speakers suggested that the Metro Vancouver real estate market is healthy and stable.
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.