Brad Lamb, a Toronto developer on March 21 in an email warned against a foreign buyers’ tax to be introduce in Ontario stating it will have negative effects on supply.
Even though the tax implemented in Vancouver has managed to normalize home price in the city, the likelihood of it having the same effect in Toronto is however uncertain.
Initially, Ontario finance minister Charles D’Souza had been against the foreign buyers’ tax highlighting the spillover effects it will have on nearby markets. But things are turning around as he recently is giving the tax a second thought.
But according to the Ontario Real Estate Association, the lack of supply in the city is the sole factor responsible for the soaring home prices.
Tim Hudak, CEO of the OREA went on to add that many cities going through supply shortages are seeing their population increasing rapidly. And if millennials are to have a place in the city, then the provincial government should make provision of increasing on supply.
The greater Toronto Area continues to see a rapid demand for homes despite the lack of supply. This has prompted many to believe that the best way to go about Toronto’s housing shortage is by increasing on supply. Interestingly, in all real estate market especially hot markets, it is quite difficult to pin point in culprits of ongoing issues as each real estate individual has a different viewpoint of the prevailing issue.
However, Vancouver which was in the same situation last year during the same period has lesser concerns than its counterparts as the 15% tax imposed on foreign investors has reaped its intended purpose and home prices in the city are returning back to normal.
The situation in Toronto just goes to proves that measure taken in one real estate market might prove to be detrimental in another; hence Toronto should give a wise thought about implementing a similar tax in the city.