A year after the NDP introduced a new tax package on homes in B.C., the property transfer tax is expected to net $330 million less than expected.
The property transfer tax, or PTT, was projected to bring in around $2.2 billion to the government’s coffers this year. That number has now been slashed to $1.9 billion, and is expected to stay flat for the next three years.
The property transfer tax is charged every time a home is sold in British Columbia – when sales and prices were soaring several years ago, the property transfer tax was a huge part of balancing the budget.
Last year, the provincial government increased the foreign buyers tax and the introduced a speculation and controversial property tax on homes over $3 million.
“Money laundering and speculation in the real estate market was allowed to take root in our province,” said Finance Minister Carole James in her address to the legislature Tuesday “and we’re finally starting to see some moderation.”
Since then, housing prices have dropped in B.C. by nearly 10 per cent; however, lower sale numbers mean less homes being built.
“We’re reducing the number of homes that are going to be built by 25 to 30 per cent, at a time when we need to be building more homes,” said Ann McMullin from the Urban Development Institute.
Ministry officials are predicting an upturn in the market to the tune of three per cent, with moderate price increases.
But B.C. Liberal leader Andrew Wilkinson says the drop in housing starts - the number of houses currently being built - hurts the construction business and the province as a whole.
“This is a government who seems to think they can continue to increase spending, while also projecting a 25 per cent drop in housing starts,” said Wilkinson.
“That’s not going to lead to an awful lot of employment in the construction business, and it’s certainly not going to help affordability.”
Cameron Muir of the B.C. Real Estate Association agrees with Wilkinson and McMullin.
“There’s not enough homes being built, and we’re going to be into another cycle of rapidly rising prices where affordability gets out of reach,” he told CTV News.
A cycle which could create more instability in a housing market already unaffordable for many.