B.C.'s harmonized sales tax (HST) has been voted out, but the tax is having a negative and lingering effect on the recreational real estate market across the province, according to Rudy Nielsen, president of Niho Land & Cattle Company, which specializes in raw land and recreational sales.

According to Nielsen, the introduction of the HST in July of 2010 had a chilling effect on recreational sales, especially to Albertans. Unlike new residential homes, there is no HST rebate or incentives for investors buying recreational property, such as new resort condos or cottages, he noted. "The HST knock on recreational ranged from staggering to a disaster," Nielsen said.

Despite discounted prices, the post-HST recreational market "went soft as mud", Nielsen said in a recent Niho report.

As an example, in the first six months of 2010, before the HST was introduced, Albertans purchased 386 properties in the Kootenay area of B.C., valued at $136 million. In the second half of 2010, after the HST was introduced, sales to Albertans dropped to 225 properties with a total value of $63.1 million, the Niho survey found.

In the Okanagan, sales to Albertans fell from 420 properties to 343 properties in 2010 after the HST came into effect. On Vancouver Island, Alberta buyer sales fell from 264 to 171 properties and the total dollar volume for sales to Albertans declined from $121 million to $83.7 million.

Nielsen said confusion and slow sales will continue in the recreational market until there is some clear information on how the HST is to be replaced. He predicts "the day after the HST ends [now scheduled for spring of 2013] expect a surge of sales and then steadying [of the market] as buyers mosey back in."