Last year, the BC government took several steps to try and cool Metro Vancouver’s hot property market and increase affordability. However, despite the government’s best efforts – including a 15% foreign buyer’s tax – the gap between housing prices and income is growing wider than ever before.
Greater Vancouver home prices reached a record benchmark price of $967,500 – an 8.8-per-cent increase from the year before. The average price of a detached house reached a record $1.8 million in May.
Vancouver city proper is one of the least affordable areas, with a detached home requiring 182 per cent of the median household income. More surprisingly, North Vancouver district also beat out Vancouver, requiring 192.5 per cent of the region’s typical monthly income to cover the mortgage, taxes and maintenance costs of a home. Lions Bay, Oak Bay, Delta, Bowen Island, North Saanich, Squamish and the township of Langley also rank among the least affordable municipalities in the region, based on median price and income.
Consumers are still willing to pay unprecedented prices. Residents can expect to put 48.6 per cent of their monthly income toward housing. If 48 per cent is going to pay your mortgage, strata fees and taxes, then not much is left over to go towards additional expenses. Younger people are increasingly getting help from their parents and living on debt. So it’s not surprising, Vancouverites have increased their consumer debt in a 12-month period by 4 per cent – more than any other city in Canada, according to a recent report.
There were a number of government rules and regulations made last year, including the increased property-transfer tax from 2 per cent to 3 per cent on homes valued at more than $2-million. The government also clamped down on corrupt industry practices such as shadow flipping. And in August, the province introduced the 15-per-cent property-transfer tax on foreign buyers.
The numbers of houses purchased by foreign nationals significantly dropped in Vancouver, Richmond, Surrey and Burnaby. However, in that same period, foreign nationals made headway in markets that didn’t have the tax. In Victoria, purchases by foreign nationals went from 16.5 per cent to 23.8 per cent after the tax.
So, foreign buying activity did not disappear. It seems it just found a way around the new tax. Now the provincial government is looking at bringing in legislation to make the Foreign Buyers Tax province wide.
Foreign money undoubtedly also drove some of the presale condo market, which is not tracked because presales don’t count as real estate until the transactions become land titles.
One way to make home owning more affordable is through Rent-To-Own, a program by Apex Western Homes which you pay less of a down payment and still build equity. The seller and purchaser sign a sale agreement with a 5 year buy option at a fixed rate.
To learn more about the Rent To Own program click HERE