“Where are those foreign investors going to go? They're not going to want to pay that 15 per cent, so they're going to now dump it into the Toronto real estate market, which is already hot,” Toronto-based real estate agent Derek Ladouceur told The Canadian Press
The new tax, which took effect last Tuesday (August 2), was intended to help cool down the out-of-control price growth in Vancouver. However, many Toronto agents echoed Ladouceur’s fears that the city’s homes, especially those in the luxury segment, would become increasingly out of reach of domestic buyers as a result.
“With an additional tax [Toronto activity] will grow exponentially, in my view,” Dianne Usher of Royal LePage said.
“Certainly I think Toronto and potentially other markets like Montreal will start to become more attractive, because comparatively speaking they will be less expensive,” Sotheby's International Realty Canada president and CEO Brad Henderson agreed.
Latest CREA numbers revealed that the average home price in Toronto grew by 17 per cent year-over-year in June, up to $746,546. Meanwhile, the average value of Vancouver residential properties rose by over 11 per cent, up to $1,026,207.
Toronto mayor John Tory said that the city government in not in a rush to decide about intervening in the affordability crisis, although he added that implementing a similar levy on foreign buyers—which have been estimated to own around 3.3 per cent of the city’s condo units—is not out of the question.
“I think in the end what people want to know is this: they want to know that if we're going to do anything, that it's going to be effective, not that we're going to do something for kind of show business or political purposes or even for revenue-generating purposes,” Tory stated.
A renewed rush to avoid B.C.’s just-implemented property transfer tax on foreign buyers might only serve to inflame Toronto’s situation further, local industry professionals warned.