New B.C. tax might exacerbate Toronto situation

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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.
“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.
  • Kris Kooblall on 2016-08-06 8:24:27 AM

    Here in Ontario, this housing crisis is so simple and easy to surmise except the provincial and municipal authorities are barring the strong economic insinuations from The Bank of Canada, CMHC et al.

    The 15% tax imposed on Vancouver exceeds the Harmonised Sales Tax by a mere 2% and already in July 2016, Vancouver sales are levelling off in sales of single detached homes while there is a corresponding spike in sales in Toronto's housing market.

    Should our municipal and provincial politicians here in Ontario think, for a moment, that they are going to lead us blindfolded into a valley with the evidence glaring, perhaps they are completely out of touch with reality and the implication here is perhaps deliberately so on their part?

    If we simply choose not to follow the recommendations of our own financial institutions starting primarily with our central bank, The Bank of Canada followed by the Canada Mortgage Housing Corporation and our leading commercial banks, why do we have these institutions in the first place?

    /Prices for detached homes in Toronto rose 20.7 per cent to an average of more than $1.2-million, even as the number of sales fell 6.5 per cent from the same time last year. In the 905 region, prices for detached homes hit $888,565, up almost 22 per cent from last July amid slightly higher sales numbers./

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