B.C.’s spec tax has had no impact on the Central Okanagan housing market

Kelowna and West Kelowna politicians fought the good fight against the provincial government’s efforts to impose the Speculation and Vacancy Tax back in 2018.

While they lost the initial fight, they continue to oppose the tax, believing their communities were unfairly chosen to have their economies damaged by the new tax and doubting its effectiveness.

READ MORE: Massive West Kelowna housing development moving ahead despite vow against NDP

Now, the head of the Okanagan’s real estate board says the tax hasn’t harmed those cities at all. Those are the only cities in the Interior of B.C. where the tax – designed to keep speculators from leaving homes vacant rather than renting them out full time – was imposed.

“In the beginning, when the spec tax came in, it put a lot of fear into the buyers,” Kim Heizmann, president of the Association of Interior Realtors, said during a real estate webinar hosted by the Kelowna Chamber of Commerce last week.

“Anybody who was considering buying in Kelowna, West Kelowna, all of a sudden was saying, 'well let’s look at things just outside those areas so we don’t have to worry about the spec tax'. It paused a little bit of the buying at the beginning. That’s where they saw that little bit of a dip but it’s kind of worked its way out a little bit now.”

A study done by Brendon Ogmundson, chief economist of the B.C. Real Estate Association and a speaker on the webinar, backed that up.

The study found that home sales dropped 12.5 per cent in the B.C. cities where the tax was imposed from 2018 until March, 2020, when the study was posted. There was also a five per cent negative impact on prices.

“These impacts effectively disappear if Metro Vancouver markets are excluded from the analysis, suggesting the impact of the SVT (Speculation and Vacancy Tax) has been limited to Metro Vancouver,” the study says. Ogmundson reiterated that point during the Zoom presentation.

One major housing project at Goats Peak in West Kelowna was initially threatened with the developer vowing to hold off until the tax was cancelled, however that project has been revived despite the tax staying in place.

Despite those findings, Dan Rogers, the Chamber’s executive director who hosted the webinar, said the Chamber still supports the mayors of Kelowna and West Kelowna in continuing to oppose the tax.

READ MORE: 'It doesn't make sense' that West Kelowna is included in speculation tax, Mayor says

In 2019, the tax was paid on 617 properties out of 60,517 homes in the two cities. For most, that was 0.5 per cent of the assessed value.

READ MORE: As the Central Okanagan grows, home speculation shrinks

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