Vancouver?s added market tax bad news
Neil Sharma
REP
Depending on which part of Canada you live in, 2019 is either a year to look forward to or one to dread.
Beginning with Toronto, Sotheby’s International Realty Canada’s President and CEO Brad Henderson expects more of the same next year, but with a caveat.
“There will be slower growth, but growth just the same, particularly since there’s a lack of product in the marketplace,” he told REP. “There’s going to continue being upward pressure on prices, but increased interest rates and mortgage stress testing has added headwinds to the lofty growth we saw in 2016 to 2017.”
Montreal will continue its ascendancy as the hottest market in the country—with perhaps the exception of Ottawa—but, like Toronto, there won’t be massive price growth.
“Montreal has continued being a healthy market with a good balance between supply and demand, and we’ll see growth with a number of transactions and modest upward pressure on price,” said Henderson.
The forecast for Vancouver, however, is not as auspicious as Canada’s two largest cities. Vancouver has suffered gales of difficulty lately, beginning with the B-20 mortgage stress test that’s similarly affecting Toronto. But with Vancouver, the NDP government increased the foreign buyer tax from 15% to 20% and it’s also introduced, even expanded, a speculation and vacancy tax.
“It’s expanded from the Greater Vancouver Area to include much of the Fraser Valley and Vancouver Island,” continued Henderson. “That market will continue to show very little activity when compared to the first part of ’16 and parts of ’17. We’ve seen considerable slowdown there and it will continue being sluggish with most players sitting on the sidelines.”
No matter which way you slice it, Alberta will be in tough through 2019. Calgary missing out on the Olympics, after a referendum revealed widespread opposition, might end up squeezing the city’s economy. However, Calgary’s economy is deeply tied to the oil and gas sector, and it has the city firmly planted in the doldrums. The federal government’s inability to get pipelines built has left the province with a glut of oil.
“What that does is deprive them of a less expensive way to get oil to the market,” said Henderson. “It’s another non-trivial headwind when compared with the price of oil and the fact that they didn’t get the Olympics. All of them together have delivered a number of blows to the marketplace.”
Indeed, the oil excess has become a major issue not just for Alberta but Canada. The province is producing more than it can get to market.
“The federal government hasn’t been able to get pipelines done and it’s really hurt the prospects of the Canadian economy,” said Shawn Stillman, principal broker of Mortgage Outlet. “That, along with the closing of GM in Oshawa—eventually there will not be a GM plant in Canada—and I can see the Canadian and U.S. economies taking downturns.”
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