A study done by Thompson Rivers University shows a new foreign homebuyers tax introduced in 2016 led to “sky rocketing” home prices in Kamloops, despite the tax not applying to the Tournament Capital.
The study was done by TRU math professor Dr. Jabed Tomal and economics professor Dr. Hafiz Rahman, whose report covered 10 years of data, from January of 2011 to January of 2020. It looked at home prices in Chilliwack and Kamloops, as it says the two cities are comparable in size and in business capacity.
The two professors say price growth in Kamloops took off around the time the B.C. government introduced Bill 28 in July of 2016. That bill amended the Property Transfer Tax Act to add 15 per cent for foreign entities buying property in Metro Vancouver. In February of 2018, the foreign ownership tax was expanded to cover the Fraser Valley, the Central Okanagan, greater Victoria and greater Nanaimo.
The report shows Chilliwack home prices started to spike in 2015, which it says is likely because home prices closer to Vancouver had been skyrocketing for some time, and it also says buyers may have started to migrate further east of Vancouver as discussions picked up before Bill 28 was brought in.
The report also shows Chilliwack hope prices stabilized in 2018, after the city was included in the foreign buyer’s tax boundaries, and price growth in the following two years was much slower.
Meanwhile, in Kamloops, the report shows home prices have continued on a high trajectory between 2016 and 2020, with average home prices rising by about $100,000 to almost $450,000. Remarkably, the report says price growth of Kamloops real estate was 513 per cent higher in the final 52 months of its study (Oct. 2015 – Jan. 2020), compared to the rate of growth in the first 57 months.
Since expanding the boundaries of the foreign buyer’s tax in 2018, government cabinet ministers have been asked multiple times if they would consider expanding the tax further, to cities like Kamloops. To date, there has been no indication that the government is looking to change that policy.
Further to price hikes in Kamloops real estate linked to taxes, according to this report, most if not all of B.C. has seen home prices surge during the COVID-19 pandemic as borrowing rates have hit records lows. As of Sept. 30, the average property in the Kamloops area cost $595,000, and the average single-family home for the Kamloops sub area (which also covers Tobiano and Sun Peaks) reached $688,000.
