The Impact of Vancouver's Foreign Buyer's Tax

The Impact of Vancouver’s Foreign Buyer Tax

In July 2016, the Government of BC imposed a steep property transfer tax on foreign buyers of real estate in Greater Vancouver. With the Government of Ontario actively looking at implementing a foreign buyer’s tax, now seems like an appropriate time to take a look at exactly what has happened in the Greater Vancouver Area in the 8 months since the tax went into effect(s) and what effect a similar tax might have in Ontario.

If you are interested in examining long-term prices trends by area and housing type across the Lower Mainland, check out our new interactive dashboard here.

Table of Contents

  1. Coles Notes
  2. It worked, but locals held back too
  3. Sales have tanked, but prices haven’t
  4. [Interactive Dashboard] More expensive areas and housing types have seen the largest declines in prices
  5. What are the possible implications for Toronto and the rest of Ontario?
  6. Sign-Up for Regular Updates

Want more info on housing prices in the Lower Mainland? Check out another one of our interactive dashboards here.

Coles Notes

  • It worked. The number of homes bought by foreigners in Greater Vancouver in the two months after the tax was just one-tenth of what it was before the tax
  • Locals held back too. Everyone was waiting for the dust to settle. Non-foreign transactions fell by 20%
  • Things aren’t much more affordable now – As of February 2017, benchmark prices (adjusted for quality) have fallen by 2.5% since the tax was introduced
  • Location and type of home are important – Apartment prices did fine, with only four areas of the Lower Mainland seeing a price fall (Burnaby East, Vancouver West, Tsawwassen, and Ladner). Detached homes were the opposite, with all but four regions seeing a price fall, led by West Vancouver (down 12% as of March 2017)

It Worked, but Locals Held Back Too

The tax was large enough to push foreign buyers out of the market. However, the resulting uncertainty led many would-be local buyers to delay their purchase as well, causing a big drop in the number of sales.

The graph below shows the volume and contribution of foreign buyers across BC in the two months before and after the tax was implemented (that’s as far back as the tax goes):

  • Foreign buyers were investing a fair bit in Greater Vancouver real estate before the tax, being involved in more than one-in-ten transactions (12.2%). This compares to about one out of every 20 elsewhere in BC
  • After the foreign buyer’s tax was implemented in August 2016, foreign investors accounted for just one-in-fifty transactions (1.7%)


The foreign buyers tax was only implemented in Greater Vancouver (which goes from West Vancouver to Maple Ridge and does not include Abbotsford or Mission).

Sales Have Tanked, but Prices Haven’t

Many local buyers, who were unsure of the impact that this would have, decided to delay their purchase.

Most sellers, it seems, were content to wait it out, rather than accept a lower price point.

The result was a precipitous fall in sales and a minor decline in prices, with the effect varying by type of household.

The graph below shows the percentage change in home sales and prices in Greater Vancouver (where the tax was in effect) since the tax was implemented:

  • In the seven months since the tax was implemented, sales have fallen by 36% compared to the same period in the previous year
  • Detached home sales were hit hardest, falling by more than half
  • Prices have seen a comparatively smaller change, with detached home prices falling by 7% across the region, while both townhome and apartment prices have risen slightly, which is indicative of the relative levels of foreign activity in those housing types


We only have data starting from June 2016 (two months before the tax was implemented and one month before it was announced. The announcement in the month of July meant that a number of transactions that would have occurred in August were completed in July to avoid the tax, making the drop in sales appear more dramatic. 

The Most Expensive Areas and Housing Types Have Seen the Largest Declines in Prices

Use the interactive dashboard below to explore the impacts of the foreign buyer’s tax on housing prices in the Lower Mainland. Just click on a housing type to see more detailed information:

  • In broad strokes, homes that were more expensive before the tax have seen the largest declines in prices (see the scatter plot below), with detached homes in West Vancouver falling 13% in price since the tax was implemented
  • The further out and the higher up you go, the smaller the impact – apartment prices in Abbotsford (which was not subject to the tax) are up a whopping 22.4% since the tax was implemented

What are the Possible Implications for Toronto and the Rest of Ontario?

So what does this mean for Toronto and Ontario as a whole?

We anticipate a more muted response compared to Vancouver but you should still expect a decline in the number of sales and a much smaller if any, decline in prices that will vary by region and housing type.

Why Do We Think the Impact Will be Less in Ontario?

  • A decline in foreign investment in the City of Toronto would likely pull in local demand from nearby markets (the 905, Hamilton, etc.) that act as substitutes; and
  • We think there is a higher degree of local demand here (but we are left with only anecdotes)

The Toronto market is a lot larger and more interconnected with other nearby housing markets than Vancouver. Housing prices are surging in Waterloo, Hamilton, Toronto, and the 905.

These markets act as partial substitutes for one another, with some would-be Toronto buyers being pushed to nearby markets. This means that if Toronto has a higher concentration of foreign buyers and sees a decline in prices from a hypothetical tax, then some demand would come back from the periphery markets, mitigating the impact.

In addition, stories abound of packed open houses and bidding wars. This is local demand, not foreign. A smaller percentage of foreign investment would mean a smaller impact.

Will Ontario Impose a Foreign Buyer’s Tax?

We’re betting they will, yes.

The impact to residents will likely be minimal and there is broad-based voter support for it. This makes for a perfect policy recipe, given that elections with a particularly unpopular incumbent are on the horizon.

What Do You Think?

Let us know if you think we are missing something or mischaracterizing the data in the comments below.

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