Government measures aimed at curbing housing speculation will fail to improve affordability in Vancouver and Toronto, according to a new Bloomberg analysis that culled data from Teranet Inc.’s land and housing registry.
This is because flippers accounted for only a minor fraction of residential sales in Canada’s hottest residential markets, per the Teranet data.
In Vancouver, only 3.4% of condo sales between April and June this year were flipped units, compared to the 5% proportion back in March 2016. This was prior to the B.C. government implementing a 15% tax on foreign home buyers.
A significantly slower market between then and now has discouraged condo flippers, according to realtor Steve Saretsky.
“As soon as [prices] stop rising you get into a number of issues,” Saretsky told Bloomberg. “Are you really going to try to flip it in a down market? There’s no profit to be made.”
Meanwhile, in Toronto, a mere 1.8% of total condo sales in June 2018 were those of units that have been previously sold over the past year. This was considerably lower than the 4% rate a mere two years ago in April 2016.
Flipping “has always been a very rare occurrence” in Toronto, according to RE/MAX Integra regional director (Ontario) Christopher Alexander.
“Most people buy real estate to hang onto it for at least five to seven years,” Alexander said, adding that many short-term sales are due to life-altering factors such as sudden job changes.