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The people in the know are saying there is no bubble, it's the lack of the transitional rules for taking out the HST that is causing some buyers to sit on the sidelines.  

 

There is no real estate bubble in Vancouver but, according to a panel of speakers at a recent Board of Trade event, a lack of clear transitional rules leading up to the return of the provincial sales tax is having a negative effect on the real estate industry.

 

That was the message delivered by the panel of three real estate industry experts, including the Board’ President-Elect Eugen Klein, to a packed house at the Board of Trade’s Bubble Trouble event on October 21 at the Fairmont Hotel in Vancouver.

 

Other panelists included Ward McAllister, president of Ledingham McAllister Properties, and Richard Wozny, of Site Economics Ltd. The panel was moderated by David Podmore, CEO of Concert Properties Ltd.

Each of the speakers presented information that helped to set the overall picture of what they consider to be a solid overall market that is not in the midst of a bubble. But they directed their strongest comments towards the impact that the lack of transitional rules is having on the market right now.

 

“Potential buyers, especially the under-25 group, are sitting on the sidelines,” said Klein. “It’s also affecting home renovation projects with HST on them because consumers don’t know what to do.”

 

“Potential buyers, especially the under-25 group, are sitting on the sidelines,” said Klein. “It’s also affecting home renovation projects with HST on them because consumers don’t know what to do.”

McAllister was the most vocal in his criticisms, noting that he and his company have been “literally begging” the provincial government for transitional rules since the results of the referendum to repeal the HST were announced.

 

“What is amazing to me is that it took the government three days to bring this new tax in and now they are telling us it is going to take up to 18 months to unravel,” said McAllister. “This is really hurting us in the new home business just because of the uncertainty.”

Both Klein and McAllister noted that they are seeing developers taking on a portion, or even all, of the HST on their product to try and remove that uncertainty for potential buyers.

Other information provided by the speakers suggested that the Metro Vancouver real estate market is healthy and stable.

 

Wozny forecasted that low interest rates will hold steady into the foreseeable future, which will translate into continuing sales, and McAllister highlighted immigration data that shows that approximately 52,700 immigrants will move to British Columbia in 2011. Of that total, some 42,000 will move into the Metro Vancouver area, meaning that the need for new housing will remain strong.

 

Klein pointed to steady residential sales driven by high-end property demand in Richmond, West Vancouver and the Westside of Vancouver. He also updated major commercial projects that will add approximately five million square feet of retail space and 1.5 million square feet of office space to Metro Vancouver by 2015.

 

“Putting the residential and commercial real estate sectors in perspective, the Lower Mainland remains a very desirable place to live and work,” said Klein.

 

Comments

Shamus Baier - RE/MAX Camosun on Nov 7, 2011 11:16 AM
Great article! It's no secret that whenever people are unsure of something, the easiest response is to do nothing - take the wait and see approach. The problem with that is if your buyers are waiting until sales and prices start climbing, then they have already missed out on the best time to act.

I wonder how many new-home builders will be scheduling projects to complete after the March 2013 HST deadline? Will so many sellers have waited to list their home that they end up flooding the market and losing any potential gain from the increased number of buyers that have waited until after the deadline to buy? 2013 is a long way off, and a very long time to postpone a move if you are ready to go now. I know Victoria's real estate market is extremely appealing to buyers right now, with a high inventory to choose from and rock-bottom interest rates. Some of those
side-line buyers may realize they missed out and cost themselves a small fortune by waiting until after the HST deadline.

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