We’re less then 11 months away from its implementation and you can be sure there will be many round table debates, lobbying and changes to come; that said we do know 2 things: it’s called the Harmonized sales tax (HST) and we’ll all be paying it in the Province of British Columbia starting July 1, 2010.

What I think:

Unless the B.C. Provincial Government is willing to accept more credits, concessions and higher price thresholds for the rebates, the price for ALL housing stock will increase and the consumer will be hurt yet again. I actually support the HST in principle, but how it works within the new housing industry requires very careful consideration and adjustment. The HST, as proposed, will simply hurt ALL home and land owners – current and future. It’s really very simple….the real estate development industry cannot supply new housing unless the price it can reasonably expect to sell exceeds the sum of all inputs including land, hard costs (construction), and soft costs (financing, architectural fees, marketing and sales fees, etc).

Prices will have to go up or input costs will have to go down. The HST would apply to the total retail cost of a new home, and yet, credits could only be received on hard costs which is a fraction of the total housing cost. And in Vancouver, where overall Real Estate costs are the highest in Canada, the HST impact will be the greatest due to the fact that it is the LAND component only that differentiates value between locations (i.e. a new kitchen sink costs the same in Burnaby as it does is Williams Lake). The bottom line: as it stands now the cost of real estate is going to increase significantly on July 1, 2010 unless the current offering set forward by the Provincial Government experiences some changes.

The continued long-term pressure on our housing stock due to increasing population growth and international demand will continue to place housing at the forefront of BC’s economy. The BC Government needs to look long and hard at protecting the equilibrium between consumer affordability and developer profitability.

Happy Selling,

Cameron McNeill