The budget was rife with tax increases, including those relating to real estate, but experts on the ground say those fee increases aren’t likely to have an impact on the market.
“Alberta right now is an interesting time,” said Duane Ritter, a sales rep in Edmonton. “I don’t really believe the budget will have any effect on real estate... It’s just going to take more money out of our pockets.”
The budget, which was announced Thursday afternoon, called for increases to many of the province’s taxes. Most notably, Alberta has done away with a flat 10 per cent tax, instead adding two brackets for those earning more than $100,000 in taxable income.
Traffic fines will rise an average 35 per cent, while taxes on alcohol are increasing 16 cents for a bottle of wine and 90 cents for a 12-pack of beer. Taxes on cigarettes are set to jump by $5, to $45 per carton. Fuel taxes will increase to a total 13 cents per litre, which is still the lowest in the country.
The greatest potential impact to real estate, however, is an increase in the land title and mortgage registration fees. As the Calgary Herald reported, those are expected to spike to $1,230 on a $500,000 property. That’s a four-fold increase from the previous fees of $290.
“I don’t think there’s anything major that came into the budget that’s going to deter real estate sales,” said George Bamber, a broker/owner in Calgary. “It’s another expense that people don’t really want to incur, but it’s going to be the cost of doing business.”
Most of the sales in the province are taking place in the mid-to-low price ranges. While this increased tax won’t necessarily stop people from buying, Ritter said it may take potential buyers a little longer to save up.
“(Buyers) are not going to say, ‘Oh that’s going to cost me another $1,000? I’m going to rent for the rest of my life’,” he said. “It may take a little bit longer for people to save up what they need, but they’re still going to buy a home.”
Bamber agreed – sales are still happening, he said. But many analysts are still focused on the major year-over-year drop-offs that many markets have experienced: in February, Calgary sales fell off more than 34 per cent, while sales in Fort McMurray were down almost 65 per cent.
Prices, however, weren’t affected nearly as much – they were down less than five per cent in Calgary, and actually rose in Fort Mac.
“I think everybody right now is just waiting to see what’s going to happen,” Ritter said, adding that little change to housing prices points to a market that’s not panicked.
“But the good news is nobody is being irrational… Prices aren’t falling because there’s no panic. That panic is what causes prices to drop … and we don’t have that.”
That wait-and-see attitude is likely to carry on once the changes in the budget begins to be felt, and both Bamber and Ritter think that calm among the market will continue even beyond that.
“People buy and sell for different reasons, and if that added cost is going to change your mind from buying and selling, then so be it,” Bamber said.
“I don’t think [the increased registration fees] will be a deterrence, but more an annoyance.”
by Olivia D'Orazio