According to a new article in realtor.com, Chinese real estate buyers are switching their focus from Vancouver to Seattle. The change has come since the introduction of a 15% tax on foreign investors in Vancouver that was suddenly brought in last August by British Columbia.
The tax is applicable to anybody who isn’t a citizen or permanent resident in Canada and who chooses to buy property in Metro Vancouver. Compared to a year earlier, Chinese web searches for real estate have increased by 1.8% for Seattle in December, but have declined by 37% for Vancouver. Overall, searches for property Seattle from China increased 125% year-on-year in November, after rising 71% in October. Year-on-year, prices in Seattle increased by 10.4% in November 2016 compared to the rest of the US where prices increased by 5.6%.
Seattle is just 120 miles away from Vancouver so it is easy for Chinese buying property in Seattle to keep in touch with friends and family in the Canadian province. As yet, the article points out it’s far too early to quantify the effect of this growing interest in real estate sales in Seattle, but this increased interest comes when Seattle is already ranked as being one of the hottest real estate markets in the country. There are also rumors that many Chinese families and investors are looking to sell their Vancouver properties to move to Seattle, purely because of the tax. Additionally, other cities worldwide have begun to introduce policies discouraging foreign purchasers. These cities include London and New York, both locations that have previously been popular with Chinese buyers.
Towards the end of 2014, the UK increased stamp duty, a property tax on payable by the buyer to 12% of the sale for properties costing over £1.5 million and in April another 3% was added to the sale price of homes for foreign buyers or for those choosing to rent out their properties. In Australia, foreign buyers are barred from purchasing resale properties and some states have also chosen to impose taxes on foreign purchasers. The Mayor of New York recently announced a proposed 2.5% tax on properties costing $2 million or more. In Seattle, the city council is also looking at new measures which include a vacancy tax. This is something Vancouver residents looking to buy or rent property found particularly annoying, where a foreign investor would buy a property only to leave it empty.