Toronto seems intent on addressing housing affordability through policies aimed at cooling the market, and a forthcoming tax may be the only answer. But is it the right one?
“There are a bunch of other hard stops you can do. You can say the banks have to qualify five year mortgages at 4.64%. But that’s a federal thing, not a provincial thing,” Toronto-based broker Ron Butler
told MortgageBrokerNew.ca. “Any tools the provinces actually have are tax-related. They don’t have any other tools.”
Both a foreign buyer tax and a vacant home tax, respectively, have been mentioned by various politicians, including Mayor John Tory and Ontario Finance Minister Charles Sousa.
But brokers are questioning the unintended consequences of these types of taxes.
“The problem with a new tax, once it is in place it has no place to go but up. What started this problem was the double land transfer tax making it too expensive for the trade up market to move causing a shortage of listings,” Omer Quenneville, a broker with Centum, said in the MBN forum. “And so what are they going to do? Raise it. Home ownership is the only thing left that people have to a secure retirement. They mess this up any further and we are going to have a real problem down the road.”
It remains to be seen what, if anything, the province does to do to address housing affordability in its biggest city.
But with home prices jumping 17.3% last year – and expected to rise by an additional 10-16%, according to the Toronto Real Estate Board – it seems only a matter of time before the government takes action.