Bob Price: the Speculation Tax continues to be a hot issue in the valley
It’s been said that time heals wounds. Not always.
In the Okanagan Valley, anger and outrage over the NDP government’s Speculation Tax on real estate is showing no sign of easing, despite the passage of time.
“NDP policy seems to be to throw a tax at it to try to shake things up while failing to look at the problem for what it squarely is,” says Marv Beer, the openly frustrated past president of the Okanagan Mainline Real Estate Board (OMREB).
Realtors throughout the Kelowna region are in full agreement that while the Horgan government claims the spec tax will create more rental housing, in their market, nothing could be further from the truth.
“The real impact has been that Kelowna area home sales have dropped considerably over the last year and a bit,” laments Beer, citing the latest OMREB data.
The once robust Kelowna and West Kelowna housing market has slowed substantially, with just 879 residential sales this year, compared to 1,170 at the end of March last year. That works out to a 24.87% drop.
At the same time, the average selling price has seen a 1.6% decline, to $722,463. And while the average selling time in Kelowna and West Kelowna has now reached 67 days; before the spec tax was applied, it was 45 days.
“The long and the short of it, is there is next to no speculation happening in Kelowna,” stresses Beer, pointing out that foreign buyers account for less than 3% of overall sales volume.
Beer contends that while Albertans have been buying into the Okanagan market for several years, they are hardly speculators.
“These are people who have earned the right through years of hard work to buy their family a secondary property to enjoy life, and the B.C. government is taking that away.”
Beer’s concerns about the Speculation Tax are echoed by Kelowna Mayor Colin Basran.
“As it stands, the Speculation Tax is not equitable because true speculators can simply purchase in neighbouring communities,” says Basran, who also warns that other sectors of the local economy such as construction and tourism will suffer from market uncertainty related to the tax.
Speaking of neighbouring communities currently exempt from the tax, Beer says he wouldn’t be surprised if the government expands the speculation bite.
“I think definitely Kamloops could be a market the government would look at. If they want to expand the program, Kamloops would likely be a spot for it, given it’s still robust market,” predicts Beer.
According to the latest B.C. Real Estate Association housing forecast, Kamloops is projected to be British Columbia’s second hottest housing market in 2019 in terms of sales and price increases, only behind Northern B.C., where LNG excitement has ignited residential sales.
While the Okanagan Mainline Real Estate Board is sharply critical of the Speculation Tax, it has also suggested alternative measures to increase housing affordability. While admitting there are significant homeless issues throughout the province, OMREB says what is lacking is government encouragement for developers to build more rental stock.
Beer argues that over the past 25 years, the lucrative condo market left rental accommodation on the back burner. And with strata rules that often limit people from renting out their properties, the result has been a perfect storm of zero vacancy rates in the rental market.
But for those who remain somewhat optimistic that the current B.C. government can be convinced to rethink its Speculation Tax, don’t hold your breath.
Bob Price is a veteran B.C. broadcaster who anchored the morning news on CHNL radio in Kamloops for the past 30 years. Bob is also a past Webster Award winner whose previous stops included Vancouver and Calgary.