The B.C. government’s newly implemented 15 per cent tax on foreign home buyers in the province will only compel wealthy overseas nationals to set their sights elsewhere, and possibly inflame the Toronto housing market even further, various observers stated.
“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 told The Canadian Press
B.C. officials said that the new tax, effective for homes sold on and after August 2, was meant to help cool down Vancouver’s overheated housing segment, which has seen an ever-increasing proportion of foreigners over the past few years and has priced domestic buyers out of the market.
And while foreign buyers have been estimated to own a miniscule 3.3 per cent of Toronto’s condo units, talks of a tax similar to B.C.’s have increased in volume.
Toronto mayor John Tory said that the city government in not in a hurry to decide about imposing such a levy, however.
“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.
The average price of Vancouver residential properties rose by over 11 per cent year-over-year in June, up to $1,026,207. On the other hand, Toronto prices increased by 17 per cent in the same period, up to $746,546—and this is just the beginning, local industry professionals said.
“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 warned.
Ladouceur added that the possibility of price increases across all housing types in Toronto—including condo units, detached properties, and luxury dwellings—due to more foreign investors is very high.
“With an additional tax [Toronto activity] will grow exponentially, in my view,” Dianne Usher of Royal LePage agreed.
Toronto mayor not in a hurry to decide about intervention in housing
B.C. foreign buyer’s tax an ineffective show of force - analysis