Toronto and Vancouver have both introduced a foreign buyers’ tax on international buyers but according to TD Economics the tax initiated in Toronto will have a different effect as opposed to Vancouver.
A report from the TD Economics suggests that the tax made by the Ontario government will possibly have a long lasting impact on the market compared to the short-lived effect it had in Vancouver which is once again peaking up.
The report went on to indicate that even though previous predictions have stated that the GTA will see a 15% increase in home prices, the economic survey deviates from this stating there will be a 12% increase instead.
Even though there are similarities in both cities, the difference however is the fact that home resales are on the increase in the Toronto market while last year in the Vancouver market, resales were down.
According to the Toronto Real Estate Board, the GTA saw a 48.9% increase in sales activity in May, just a month following the announcement of the government of new housing regulations
Contrarily to this, the Greater Vancouver Area market last year went through a 1% decline in home sales in the wake of the newly introduced tax. This was observed by the Greater Vancouver Real Estate Board.
The TD Economics reports also highlighted the fact that even though the Toronto market is balancing out in an orderly manner, it is also possible that an increase in supply will likely result to a drop in home prices and this will be a huge difference from what unfolded in Vancouver.
With this possible prediction, it is possible that Toronto home prices will not recover from the tax in a short period of time as seen in the Vancouver market, but similarly to Vancouver, the Toronto housing market is having the same immediate effects.
Home sales in both Toronto and Vancouver declined by 20.3% and 32.6% respectively from the previous year.
However, even though Toronto is not expecting prices to bounce back anytime soon, after the tax works its way through the system, the city is also not anticipating a rapid correction.