News
Real Estate News: Looming HST heats up B.C. home sales
Looming HST heats up B.C. home sales
Wendy Stueck
Vancouver — From Wednesday’s Globe and Mail Published on Tuesday, Oct. 20, 2009 10:24PM EDT Last updated on Thursday, Oct. 22, 2009 2:31AM EDT
When the British Columbia government unveiled plans in July for a harmonized sales tax to kick in on July 1, 2010, consumers fumed over the timing – the new tax was announced a few months after Premier Gordon Campbell secured a third term – and potential price hikes for everything from haircuts to hamburgers. Then they started thinking about how they could beat it – by, for instance, buying or building homes to sell before the new levy kicks in. Result: As outlined in a new housing forecast from Central 1 Credit Union, a hot housing market driven in part by the pending HST. Higher interests rates could cloud the rosy outlook.
Sales surge
Following a 25-per-cent sales plunge in 2008, B.C. housing sales are expected to climb by 10 per cent in 2009 and by 30 per cent in 2010. Builders are expected to scramble to get houses on the market before the HST takes effect. Under the new regime, new homes worth more than $400,000 will be eligible for a $20,000 rebate. But about 40 per cent of all real-estate transactions in B.C. involve sales priced at more than $400,000, according to the B.C. Real Estate Association, which is calling for the HST rebate threshold to be bumped up to at least $500,000. Critics say the HST could boost new-home prices by as much as 7 per cent. The province says home buyers will benefit because the “embedded” provincial sales tax on new homes will be eliminated, as builders will be able to recover the tax paid on materials.
Prices follow
The median sales price for a residential property of less than two acres in B.C. is forecast to increase to $369,000 in 2009 from $360,000 in $2008. A 6-per-cent gain in each of the next two years is expected to push the median sales price to a record high of $415,000 in 2011. The average sales price is expected to rise by about 7 per cent a year in each of 2010 and 2011. There is a tendency to underestimate price increases, so this forecast could prove low, according to Central 1. The last few months have seen some previously shelved real-estate projects – including Jameson House, an office-condo tower in downtown Vancouver – get back on track. That trend will show up in housing starts, predicted to rebound by nearly 50 per cent in 2010. The pending introduction of the HST is expected to result in a spike in housing starts around mid-2010, followed by a drop-off and a resumed trend upward.
Big city, big prices
The sales upturn is expected to be much stronger in metropolitan markets such as Vancouver and Victoria than in more resource-dependent areas such as the Northeast or the Kootenays. For 2009, Multiple Listing Service residential sales are forecast to jump by 45 per cent in Vancouver and 25 per cent in Victoria, but shrink in southeastern and northern parts of the province. Small gains are forecast in the Okanagan and Kamloops markets. Next year, sales momentum is expected to pick up in markets that have been lukewarm in 2009, while tapering off in cities. Gains between 30 per cent and 50 per cent are likely in the Okanagan, northeastern and Vancouver Island markets outside of Victoria. Markets in northeastern B.C. are expected to perk up in 2011 as a result of energy-sector activity.
