In the fall of 2010 we find that the real estate market in Victoria is feeling the effects of the Harmonized Sales Tax (HST) brought in as of July 1st, as well as resurfacing uncertainty about the state of the economic recovery.
Resale (existing) homes are exempt from HST, but costs that are subject to HST include:
- realtor fees or commissions;
- closing costs;
HST is applicable to:
- new homes;
- substantial renovations, and
- building lot purchases.
Buyers need to know that in the case of a primary residence, there is an HST rebate program applicable to new homes costing up to $350,000, which declines to 0% at $450,000. For more detailed information about the HST rebate program please read our Victoria BC Real Estate Newsletter Fall 2010.
These taxation changes have weakened what was a substantially recovering market, and combined with renewed economic fears globally it’s not surprising to find that both average and median sale prices have decreased from the highs of earlier this year.
The slowdown is not limited to the Victoria real estate market, or even BC and Ontario, who have both recently instituted the HST, but reflected across Canada.
Sale prices have slumped across the board for all types of housing and all price categories in the Victoria real estate market relative to the previous quarter, but are stable relative to the third quarter of 2009. Reduced inventories have resulted in a balanced market, overall.