TORONTO -- British Columbia's new speculation tax on out-of-province buyers will likely convince a wave of owners to sell their vacation properties, pushing down home prices, said a forecast from Royal LePage.
By the end of September, the real estate company is expecting the average price of a recreational home in B.C. to reach $531,333, a 2.8 per cent drop from last year's average of $546,444.
Under B.C.'s speculation regulations, owners outside the province will be taxed 0.5 per cent this year, but next year will see the rate climb to 2 per cent for foreign investors and 1 per cent for Canadian citizens and permanent residents not living in B.C. but owning properties in the province.
Royal LePage concluded the tax would spark a price dip in B.C.'s recreational housing sector after surveying 200 real estate advisors who specialize in such properties between May 15 and June 1.
About 55 per cent of B.C. respondents said they think the tax will "weaken momentum within the region and keep sales activity from reaching its true potential," while 40 per cent thought it would impact prices.