The most expensive city in Canada is now the world's riskiest city in housing if a sudden downward correction were to happen.

Housing prices in Vancouver are always on the rise and even during the economic crisis of 2008 Vancouver still saw growth in Real Estate values. As wages and commodity prices weakened the market continued to rise which has caused a "significant overaluation" in the market.

Over the past couple of years the Vancouver market has seen increased upward pressure due to strong offshore investors and foreign property owners. The risk comes from the fact that Vancouver Real Estate values are out of sync with current economic conditions in Canada and around the world.

Other cities also sited and being risky are: Vancouver, London, Stockholm, Sydney, Munich and Hong Kong.

Vancouver, Toronto and other major Canadian cities have had a huge drop the first half of 2016. The distance between what people earn pre-tax and what homes are costing now is ever increasing and detached homes and places to raise a family are hard to find. But the drop in the cost of higher end detached homes may only start to become reality later in the year if this trend continues.

This trend has started to encourage more townhouse and condo developments in outlying regions such as Maple Ridge where homes and condos have now separated by larger margins in terms of what people can afford.

Some analysists say that Vancouver is expected to receieve a small housing correction but nothing too alarming as the demand for homes and affordability in the Lower Mainland is ever present.

Even though Vancouver and some outlying cities have seen a small decline, the rest of BC has improved and continues to be a strong market.

Government to introduce a 15 per cent foreign buyer tax effective August 2

The provincial government will implement a 15 per cent foreign buyer tax on all residential transactions effective August 2, 2016. The tax will be added to the Property Transfer Tax and will apply to all residential properties purchased by foreign nationals or foreign-controlled corporations.

The new tax will be payable on applicable transfers registered with the Land Title Office on or after August 2 regardless of when the deal was completed.

The tax will apply to any transferee that is a foreign national, foreign corporation, or taxable trustee. Foreign nationals are defined as people who aren’t Canadian citizens or don’t have permanent resident status in Canada. (Permanent residents will have a valid permanent resident card issued by the Canadian government.)

“Housing affordability concerns all of us who live in the region. Implementing a new real estate tax, however, with just eight days’ notice and no consultation with the professionals who serve home buyers and sellers every day needlessly injects uncertainty into the market,” Dan Morrison, Board president said. “Government has had a long time to take action on the affordability issue, yet they decide to bring this new tax in over a long weekend, with no notice, and no time to prepare. It would have been prudent to seek consultation from the people most knowledgeable about the impact.”

Under the new tax, for example, a foreign buyer or foreign-controlled entity will pay an additional $300,000 in tax on a $2 million home.

“To minimize short-term volatility in the market, we’re calling on government to exempt real estate transactions that are in the process of closing from this new tax,” Morrison said.  

Foreign corporations are any corporation not incorporated in Canada, or are incorporated in Canada but controlled in part, or wholly, by a foreign national or corporation. Publicly traded companies are excluded.

Commercial properties are excluded, and mixed-use properties will only pay the tax on the portion of the property’s value that’s for residential use.