VACANCY TAX AND HOUSING PRICE – DIFFERENCE IN DIFFERENCE MODEL IN REAL ESTATE MARKET

With the purpose of addressing housing affordability in British Columbia, provincial government announced the Vacancy and Speculation Act in February 2016. Previous research on property tax and real estate has found that property tax was expected to curtail housing price in British Columbia. In this article, we study the effect of vacancy tax on residential housing price. We conducted a five-year difference-in-difference analysis of the impact of vacancy tax particularly on Census Metropolitan Area with regard to different property types and neighborhoods. Unexpectedly, we cannot detect that vacancy tax trigger consequential price change in the composite real estate market taking three major property types into consideration. However, we detect that this policy does have a negative impact on condo price of approximate 2.3% in expensive area neighborhoods. Our research examines the effectiveness of the vacancy tax applying a quantitative approach.