Recent statements by a Liberal administration official pointed at the possible implementation of a luxury tax on high-end homes to introduce a modicum of moderation in Canada’s most overheated residential real estate markets.
As reported by Jacques Bourbeau and Nick Logan of Global News
, the remarks came in the wake of new numbers that showed the latest in the seemingly non-stop trend of price growth in the Canadian housing sector, with last month seeing a 36.9 per cent year-over-year spike in the benchmark price of a single detached property (bringing the figure to $1,513,800) in Vancouver.
Over the same period, the benchmark price for attached homes in Vancouver shot up by almost 25 per cent (up to $632,400), and that of condos and apartments by 22.3 per cent (up to $485,000).
“I’d say that’s something we’re reviewing… and I’m sure the minister is looking at as well,” according to François-Philippe Champagne, FM Bill Morneau’s parliamentary secretary.
Various observers have warned over the past few months that the bubble is unsustainable, with the Organization for Economic Cooperation and Development (OECD) in particular saying that there is a direct correlation between the growth rates of prices and household debt.
“Very low borrowing rates have encouraged household credit growth and underpinned rapidly rising housing prices — particularly in Vancouver and Toronto — which together are a third of the Canadian housing market,” the OECD stated in its latest Global Economic Outlook released last week.
Several financial institutions agreed with the assessment, with the Manulife Bank of Canada revealing that its survey of Canadian home owners last month found that around 37 per cent of them were having trouble coping with the costs of living.