Is Vancouver’s foreign property tax turning investors to other markets?

This summer, British Columbia introduced a new property tax for foreign purchases of Vancouver property. The tax, which came into effect on 2nd August 2016, applies to foreign buyers of property in Metro Vancouver, charging them an additional 15 per cent tax.

The measure was introduced by officials to help combat rising house prices, as concerns surrounded high levels of overseas investment, particularly from China, and its impact upon available housing supply. On a property worth $2 million, for example, foreign investors now have to pay an extra $300,000.

The Impact

The impact appeared to be evident immediately, with, China’s largest foreign property portal, seeing searches for Vancouver homes fall on the day the tax was unveiled. (Canada is the third-largest destination for Chinese buyers, after the USA and Australia.)

“The 25th of July was the day the B.C. government announced the tax, and it was also the day had the lowest number of buyer inquiries for Canadian property in nearly two weeks,” Matthew Moore, president of the Americas for the site, said to Vancourier at the time.

According to British Columbia’s Ministry of Finance, foreign buyers made up fewer than 1 per cent of the $5 billion invested in Metro Vancouver residential real between 2nd August and 31st August, significantly lower than their usual share. The Real Estate Board of Greater Vancouver also announced that house sales fell 27 per cent year-on-year across the month of August, while Sotheby’s International Realty Canada told CBC that sales of single-family homes in Vancouver’s $1 million-plus bracket fell 65 per cent year-on-year.

“There is no question that immediately after the imposition of the tax, the market came to a near standstill, with both foreign and local buyers holding back. It was such a surprise, that everyone wanted to see what happens next,” Moore tells

Will buyers remain?

It is possible that the foreign investors will remain in Vancouver, after the initial decline in activity. Indeed, according to the Canadian Real Estate Association, Greater Vancouver home sales had already been retreating for five months straight before the new foreign buyers tax was announced. Activity has “returned to more normal levels” since, while Greater Vancouver saw prices up 28.2 percent year-on-year in October 2016. (However, single family home prices dropped from the month before, marking the first significant decline since late 2012.)

“We have some indication that Chinese buyers are beginning to explore the market again, due to an increase in inquiries on property,” explains Moore. “What we don’t know yet is if transactions are growing in any significant manner among any buyer group.”

Indeed, while’s August data illustrated an initial shift in interest in Canadian real estate, September data reflected month-over-month gains across Canada’s four largest markets, with buying inquiries up 200 per cent in Vancouver, 13 per cent in Calgary, 2.7 per cent in Toronto (following a 104.3 per cent gain in August over July) and 183.3 per cent in Montreal.

According to local developers, meanwhile, interest in off-plan properties is still strong, with Anthem Properties recording “unprecedented” levels of foreign demand for two towers at Station Square in Burnaby – a trend that would not show up in official statistics, as presale figures are not recorded by local real estate boards.

Foreign buyers made up 8 per cent of sales, the firm told The Globe and Mail, compared to 3 per cent the last time it saw such strong sales.

The tax may simply transform the typical foreign buyer profile in Vancouver from short-term speculators to long-term investors. For those in it for the long haul, the initial added cost could be offset over time, and not just through capital gains on off-plan units.

Will buyers go elsewhere in Canada?

Some Chinese buyers have also turned their attention towards other cities to avoid the new tax. Many believe that Toronto could see the biggest knock-on effect., enquiries for property in Ontario (home to Toronto) rose 66 per cent month-on-month in August 2016. Sotheby’s, meanwhile, saw sales of $1 million-plus single-family homes in Greater Toronto jump 83 per cent annually in August.

Another area in Canada that has emerged as a popular hotspot among overseas investors is Halifax, with enquiries on for property in Nova Scotia more than doubling in August compared to July.

Landcorp International, which is currently marketing a resort in Halifax, says it is “currently seeing a great deal of interest in Forest Lakes Country Club from international markets”.

“We can confidently attribute that to the value we offer for our luxury development in a great location,” a spokesperson for the agent tells

“Our international partners are also doing a fantastic job of getting the word out about Forest Lakes Country Club, and from this, we have seen a spike in our website visits, have hosted more guests and have generated sales from countries all over the world. While it’s hard to say if the recent property tax changes in Vancouver have directly prompted our international buyers to look at Nova Scotia as an investment option, it can certainly be considered a contributing factor.”

Will buyers see out other international opportunities?

It is also possible that Chinese buyers, and other investors in Vancouver real estate, will turn to other countries for opportunities. On, overall international interest in the three months since August has notably risen in Brazil, Cape Verde, Thailand and Germany. highlights several particular markets that Chinese investors are likely to consider:


Chinese buyers remain the biggest spenders on US real estate, with the National Association of Realtors reporting a total investment of $27.3 billion in residential real estate earlier this year from China. On, the USA has been the most popular property destination since July.


Since the Brexit vote in June, the UK has seen the pound weaken against other currencies, making property in the country relatively more affordable for overseas investors keen to purchase real estate either in London, widely perceived as a safe haven, or growing regional markets, such as Manchester and Liverpool. On, enquiries for UK property have risen 16 per cent in the three months since August, compared to the previous three months, while on, Chinese enquiries for British property hit a record high in September.


Chinese buyer enquiries for Malaysian property on surged 550 per cent in the year to August 2016, with Alibaba tycoon Jack Ma recently appointed as digital economy advisor for the Malaysian government, which could boost the country’s appeal. On, enquiries have also multiplied by several times in the three months from August.