While noting that the possibility remains open, Quebec financial minister Carlos Leitao assured that no plans are currently in place to impose a foreign home buyers’ tax in Montreal.
Leitao added that his department will keep a close eye on the future impact of such a tax in Ontario, including a possible “spillover effect” on Montreal real estate prices.
“We just want to be prepared that if it needs to be done then we can do it quickly, but I don't have any plans to do anything in the short-term,” Leitao said in an interview with The Canadian Press late last week. "The red flag is the behaviour of prices."
The minister added that number of foreign buyers in Greater Montreal is “relatively marginal” at the moment.
“When we look at housing market bubbles the presence of foreign buyers is one element but I’m not even convinced that it’s the main element.”
So far, the Montreal market has been spared from the overheating that has compelled the Ontario and B.C. governments to impose foreign buyers’ taxes, but experts warned that the city might soon prove irresistible to those fleeing the Toronto and Vancouver markets, both of which now have foreign buyers’ taxes.
“I wouldn’t be surprised if Montreal becomes the new target for foreign capital investing in residential real estate,” according to Cynthia Holmes, professor of real estate management at Ryerson University in Toronto.
The number of homes purchased by foreigners in Montreal increased by 62 per cent during the first nine months of 2016, but data from the CMHC showed that this segment only accounted for about 1.5 per cent of all transactions.
Earlier this month, the Quebec Federation of Real Estate Boards announced that Montreal is well on its way to experiencing its largest home price growth since 2010. The city’s residential property valuations are expected to increase by 6 per cent in 2017 (up to $312,500).
Home sales volume is also on track to rise by 4 per cent year-over-year, up to a seven-year high of 41,500 property transactions.
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