Once again, the government is indicating its concern over the rise of residential real estate prices. The BC government decided that foreign purchasers are to blame for Vancouver's sky rocketing values, and has implemented a 15% tax in order to reduce the interest. We'll have to see if this new tax is an actual deterrent.
Canadian real estate prices have already been reduced by 25%, if you consider the devaluation of our currency against the US dollar. So for high demand real estate markets such as Oakville, where foreign purchasers wish to purchase an increase of 25% doesn't appear out of the ordinary.
Since the real estate crash of 2007/8, governments and banks have instituted more financial regulations that builders must meet prior to putting a shovel in the ground, while at the same time making first time buyers provide higher down payments. It isn't a bad thing to require more financial stability of builders and first time home buyers, because it creates a stable real estate market. But the financial regulations on builders means less inventory, which is causing housing prices to increase.
Oakville has always attracted foreign buyers. It is a stunning community, with excellent schools, top notch institutions, a well run municipal government, and easy access to a world class city. Prices in our town are going to reflect world prices, which has played out again in July 2016.
According to the Oakville Milton District Real Estate Board (OMDREB), the average price paid for a residential property in Oakville was $1,049, 190.00 in July 2016, which is up $198,023 or 23% from last year. The number of units sold is down by 6.8%. If there was a glut of inventory, then we would have seen a decline in values. In July 2016 64% of detached homes sold were in excess of $1,000,000, for a town house/link/semi 64% ranged in price from $600,000 to $800,000, and for a condo 71% ranged in price from $300,000 to $600,000.
It will be interesting to see how the additional foreign ownership tax for Vancouver will play out. Will foreign purchasers simply consider it the cost of doing business in one of the most stable countries in the world, or will they walk away?