October 25: B.C.'s harmonized sales tax (HST) is dead but it continues to haunt developers of high-end homes, who say confusion over the HST phase out has stalled sales and forced price discounting. The main issue is new homes priced at $525,000 or more, which don't qualify for HST rebates, a Vancouver Board of Trade panel discussion on the Metro Vancouver housing market was told last week.
"This is really hurting us in the new home business," said Ward McAllister, president and CEO of McAllister Ledingham Ltd., a Vancouver developer. "We don't have any transition rules yet. What is amazing to me is that it took three days to bring this tax in and now they are telling us it will take up to 18 months to unravel it."
McAllister said "any of our product at $525,000 or over is just sitting." Developers are forced to make deals and discount prices, he said. The former president of the Urban Development Institute said the development industry has been "begging" for clear transition rules on the HST since a summer referendum killed the controversial tax. "The first meeting [with the province] to discuss this is November 15," he said.
Meanwhile, a report on the West Side of Vancouver new condo market, generally the most expensive in Canada, has confirmed that sales of new product has been declining since the HST was voted out on July 1. With 1,233 new condominiums unsold and another 4,151 units planned, sales of new condos in the market are averaging 112 per month with "the sales trend slowing through the summer and fall months of 2011", according to MPC Intelligence. MPC, which monitors the new home market, said the HST repeal is "negatively effecting sales of higher-end inventory."
MPC said it has begun to see price discounting and buyer incentives at a number of new West Side new condo projects.
