Ontario housing measures expected to have short lived impact, experts say

Share

A foreign buyers tax will slow but not stop money coming from Chinese investors, said real estate broker Tony Ma, whose HomeLife Landmark Realty Inc is one of the largest brokerages in Toronto serving buyers of Chinese descent.

These measures include introducing a 15 per cent Non-Resident Speculation Tax (NRST) on non-Canadian citizens, non-permanent residents and non-Canadian corporations buying residential properties containing one to six units in the Greater Golden Horseshoe (GGH).

The decision by the province of Ontario's government will impose a 15 per cent "Non-Resident Speculation Tax" on non-Canadians and non-permanent residents buying residential properties in the metropolitan area of nearly 7 million people.

Ontario started collecting citizenship data on home purchases this week, and Sousa says now the government will assess what impact foreign investment is having.

After two consecutive years of double-digit gains, the price of an average house in Toronto jumped to C$916,500 ($925,600) last month, a 33 per cent increase on the year-earlier month; the average price of a detached home topped C$1.2 million. "We have to look at what's actually happening in each of the communities and make a determination", Wynne said. There are exemptions for homes that are under construction or were sold during the year, as well as condo units in buildings that prohibit renting.

Mayo was especially heartened to hear about the measures aimed to help tenants: standard lease and the rent control.

The province has extended rent controls to all rental apartments including those built after 1991. There is very little data available on the number of vacant homes in the region, and speculation - which this tax would effectively try to curb - tends to account for a very small proportion of the market.

"In some ways, we have to realise that this is a good problem to have", Wynne said.

The Ontario government introduced a package of 16 measures Thursday created to tame runaway home prices in Toronto and surrounding cities, and improve affordability for those hoping to own or rent property.

More news: Oil prices mixed after US production seen rising
More news: Real Madrid star reveals what he thinks of signing Eden Hazard
More news: 'Infowars' Host Alex Jones Is a Performance Artist, Lawyer Says

"History has shown us that rent control leads to slums".

The province is also expanding rent controls and giving Toronto and other municipalities the power to impose a tax on vacant homes, something that Toronto Mayor John Tory has been pushing for.

While the Fair Housing Plan's creation of a new Housing Supply Team aims to identify and overcome obstacles pertaining to specific projects, specifics of how this would apply to the development industry remain unclear in the Province's newly-released documents.

Home sales across the country hit a record high last month, propped up by transactions in the fiercely hot market of Toronto, further fuelling concerns about the city's real estate sector.

The government should consider market-based solutions, such as portable housing benefits, which give cash to renters who need it (as opposed to waiting in line for scarce social housing).

The Vancouver foreign-buyer tax "had a noticeable moderating effect on prices", said Robert Hogue, economist at Royal Bank of Canada.

OFA is looking for some relief when it comes to the increase in prices of farm fuels, Currie said.

The danger of governments imposing even more taxes on real estate (without increasing supply) is that they will be playing Russian roulette with the major asset of most homeowners - the market value of their home and the amount of equity they have in it.

Share