Following an amendment to Vancouver’s foreign buyer tax, Ontario-based associations discuss the possibility of a similar policy in Toronto.
Should Toronto implement a similar foreign buyer tax?
The Ontario Real Estate Association (OREA) doesn’t think so.
“A foreign buyer tax penalizes the international MBA student who will one day start her own business in our province, or the pediatric nurse aspiring to work at Sick Kids,” Tim Hudak, OREA CEO said in a release. “The lesson here is that we need sustainable, long-term solutions that get to the root of the affordability problem, and it starts with increasing housing supply.”
OREA referenced a study by the Toronto Real Estate Board, released Tuesday, that found a mere 4.9% of GTA transactions in 2016 involved foreign purchasers.
“As the foreign buyer conversation unfolded, TREB held steadfast to the view that the provincial and municipal governments should comprehensively and patiently review the issue of foreign purchasers of real estate in Ontario before making any policy decisions and should seek out actual empirical evidence on the level of foreign buying activity in the GTA,” the board said in its Market Year in Review. “In this regard, TREB decided to take the lead on data collection and commission its own study.”
TREB commissioned Ipsos, a third party research firm, to survey agents about the level of foreign purchasing activity throughout the GTA.
The survey collected over 3,500 responses.
As previously mentioned, the survey found an estimated 4.9% of foreign transactions in the GTA – with levels as high as 6% in York and Halton regions and as low as 1% in Durham.
In Toronto, the share of foreign buyers was 5%.
According to the survey responses, 40% of foreign buyers purchased a home as a principal residence; 15% purchased for a family member; 25% purchased as a rental investment; 4% purchased as a non-primary residence; and 3% purchased with the intent of keeping it vacant.
“These results were in line with recent CMHC findings related to the condominium apartment market. In the fall of 2016, CMHC estimated that 2.3 per cent of condominium apartments in the GTA were foreign-owned. In newer condominium apartment buildings, the share of foreign ownership was slightly higher at 3.9 per cent,” TREB said.
The results suggest the influence of foreign buyers on the GTA market is minimal and that a similar foreign buyer tax to Vancouver’s isn't necessary.
Click here to read the entire study.