Soaring home prices in Toronto prompts for new measures to be taken and one of the only available alternative is for Toronto to consider taking a similar step like the one take in Vancouver to cool down the home prices.
Last week the Royal Bank of Canada CEO Dave McKay expressed his growing concern over the way home prices in the Toronto Area are heading. Serious measures needs to be taken to tackle the various factors that are affecting the overheated real estate market.
In Toronto, the average home price has increased by 26% last year while condo home prices increased 14.5%. Having a real estate market price increase above 20% is quite abnormal.
This prompts more concern especially for the average buyer who wants to participate in the real estate market for the first time.
Mr. McKay went on to point out to the several factors that are responsible for the high prices. Some of these factors he stated include, the high demand of homes at a point when the market is short in supply which has led to home sellers indulging in bidding wars.
The increase of bidding wars has led to many market onlookers predict further price increases.
Furthermore, the 15% tax introduced by the provincial government in Vancouver might also be a contributing factor as many investors affected by the tax shifted to the Toronto market. Hence a similar tax introduced in Vancouver might be the answer to cool down home prices in Toronto.
Mr. McKay is just amongst a few market experts that are expressing growing concern over the rate at which home prices in Toronto are soaring.
Last year, Canada Mortgage and Housing Corporation made a general “red flag” warning for the entire real estate market including Toronto. In this regard, the federal government has made several mortgage policy amendments including a stress test.
However, the Vancouver was at the epicenter of the attention given to the housing market where the average home price had risen to 35%. This made the provincial government to introduce a tax on foreing buyers and it paid off well as home prices in the city decline significantly during the fourth quarter.
This has left Toronto leading Canada’s real estate market as the most expensive market with many attributing this to an increase in foreign buyer’s involvement in the market.
Although the Toronto Real Estate Board disclosed figures in 2016 showing that foreing buyers accounted for only 5% of resale activities, the Ontario government however says changes will be made on its land registry system to determine the identity of home buyers.