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Property experts say HST delays hurt housing sector – Vancouver real estate annecdotes

February 17, 2012

Filed under: Real Estate Market,Vancouver — Richard Morrison @ 1:15 pm
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The industry for new homes in Vancouver is hurting over the absence of transitional rules governing the return of provincial sales tax and the harmonized sales tax was defeated in a referendum on August 26, stated by three property experts of the vancouver Board of Trade on Friday.

“We are really choked that we don’t have any transition rules yet and are absolutely amazed that our provincial government – who probably most of you voted for – thought that this thing was fait accompli and there was no Plan B,” said the President and Ward McAllister Ledingham McAllister Properties. “What is amazing to me is that it took them 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. This is really hurting us in the new home business just because of the uncertainty.”

“Since the referendum we have been literally begging for transition rules,” he said. “Any of our product that’s $525,000 and over, which is the threshold, is sitting. We are having to make deals and pay a portion of the HST.

The HST of 12 percent applies to new home sales, while the GST-PST system, new home buyers only paid five per cent GST. In the absence of transition rules, it is uncertain what the PST applies to when it is restored in 2013.

McAllister and panelists Eugene Klein, president-elect real estate Board of Greater vancouver, and real estate consultant Richard Wozny of Site Economics Ltd, were in the Chamber of Commerce to discuss whether vancouver home market  is in the midst of a bubble. All agreed that it is not, but they have stabilized their strong comments on the impact of the lack of rules around the restoration of PST.

Buyers, especially the under25 mark, are sitting on the sidelines,” said Klein. “In my own personal practice, our developers are starting to try to take that risk out of the marketplace by taking it on and including it in the price. We are starting to see units then starting to move with that because the consumer doesn’t know what to do.

“It’s also affecting home renovation projects with HST on them because consumers don’t know what to do,” Klein said.

The HST-effect was the only real damper on the Greater vancouver real estate, where all three panelists and moderator David Podmore, CEO of Concert Properties Ltd., stated it is on balance and not a bubble. Podmore wore button with a slash for the “no” marked above the text “bubble”.

“I am very optimistic about where we are heading,” he said noting that his company largely outside Metro vancouver real estate in 2007, but returned in 2009.

He cited two reasons for the Vancouver’s real estate market strong: immigration and the fact that real estate is perceived as a protection against the uncertainty that has affected global finance. Klein said the international interest in vancouver is to attract foreign buyers. He said that buyers have come to live here, only three percent characterized as foreign investors. He said the offer is now beyond question, but did not affect prices.

“Demand for high-end properties has helped drive our demand for most of the year,” he said.

Wozny said Metro vancouver’s real estate prices are “very high by any measure.”

“It must be something political or social because it certainly has nothing to do with economics.” he said.

He forecast low-interest rates for the foreseeable future, which will translate into continuing sales.

“There is no bubble in vancouver,” he said.

McAllister is the counsel of the house between 20 potential who are wondering whether we should expect that prices will come down: I can not wait to borrow his mother and father. It warned of sales, was hoping to return to the market later.

“Affordability is one of the main concerns in this market and I think will continue to be over the rest of my life.”

 

Source: Gordon Hamilton, vancouver Sun

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