Although british Columbia’s tax on foreign investors has some effects on the reduction in the housing prices, Ontario is not willing to make the same decision, as they are putting mechanisms in place, to handle the increasing house prices in the Toronto market.
Finance Minister Charles Sousa suggested that, decisions should be made to put the situation under control, as it is mostly preventing first time buyers from participating in the housing market, as they cannot afford to buy a house, even with the new policies on mortgages, it is almost impossible.
He went on saying, that it has come to their knowledge, that more efforts should be done in regards to the home prices, to enable residents to afford homes. It is also known that first time buyers are also encountering great difficulties, hence strategies are being sought.
According to sources from the Canadian Club Toronto, Sousa requested for information about the impacts of the tax put on foreign investors, on both the Greater Vancouver market, and Toronto market, stating that he does not want his decision to affect other surrounding markets.
He went on to explain that the British Columbia real estate market, is different for that of the Greater Toronto Area market, therefore much consideration should be given towards making a decision that will have no negative consequences on other markets.”We have to look at the roles of foreign investors, what listings are available in the market, to what degree there is rumors going on and flipping of houses.”
Vancouver experienced a drop in prices before the tax on foreign investors was introduced. The tax also lead to further decrease, as there was also a drop in foreign investor activity.
In the next fall economic statement to take place next week, Sousa will disclose Ontario’s way forward in handling housing affordability, but he failed to disclose whether if he is to reduce tax on first time buyers, or take steps to cut down home prices.
Toronto also has an existing tax of 1% on first time buyers and 2% for other sale price.