Dec. 11, 2009- Seventy-five per cent of members from the Mortgage Brokers Association of B.C. (MBABC) think the harmonized sales tax (HST) will hurt British Columbia's real estate industry.
"It is evident our members feel the HST will take a toll on the real estate industry, particularly for new home buyers," says Joe Santos, president of MBABC.
The HST, which begins July 1, 2010, is expected to raise the cost of owning a home significantly in both B.C. and Ontario.
A particular area of concern is the sale of homes over $500,000.
"A $500,000 sale typically generates a commission of approximately $19,000. The HST will add an additional $1,330 in tax," says Santos. "This affects home sellers perhaps to an even higher degree because the HST will be added to the real estate commissions."
Not only will the cost of a new home priced over $500,000 increase, but all the services related to real estate transactions in general will rise. The HST will force an additional cost of seven to eight per cent, which includes the various fees for house appraisals, and property inspections.
Because of this, many potential home buyers, especially first-time homebuyers, could be forced to purchase less expensive homes or postpone purchasing a home to begin with, due to higher transaction costs.