With the average home sale price increasing by 32.5 per cent year-over-year in February (up to $1.2 million), the Toronto market is unlikely to demonstrate signs of moderating its activity in the near future, and an industry player argued that it’s well past time to introduce more dramatic measures to alleviate the worst effects of the city’s overheated housing growth.
Complicating the matter is the presence of multiple, equally important factors driving the price increases, which would require an assortment of reforms that the Ontario government should put in place as soon as the next budget rolls around.
“I think we need a big stick right now,” Realosophy Realty Inc. president John Pasalis said, as quoted by The Globe and Mail. “It’s not one of those things where there’s an easy fix.”
In particular, Pasalis is calling for more decisive government intervention on flipping through a harsher speculation tax.
“This is generally what policies should discourage – they should discourage speculation in single-family homes. It’s not good, it messes up our entire market and it makes housing less affordable for buyers,” Pasalis stated.
“There are clearly elements of speculation in the market,” Bank of Nova Scotia chief economist Jean-François Perrault agreed. “There’s no doubt about it.”
Perrault noted that a tax on single-family homes flipped up to two years after purchase would cast a wider net on speculators, with the side benefit of using proceeds from such a tax to fund subsidized housing projects or assistance for first-time or low-income buyers.
“The situation we are in – negative real interest rates and a tide of capital washing around the world in search of safe assets – is unusual, perhaps without precedent,” Bank of Montreal chief economist Doug Porter said. “Thus, the policy response must also be unusual.”
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