Recent reports share that non-Canadian citizens who bought homes in Ontario are just a small percentage of recent buyers after the speculation tax was implemented for foreign buyers.
Effect of Speculation Tax?
The Ontario government released a report sharing that only 4.7% of the recent real estate sales in Ontario are by foreign buyers. This data reflects the portion of the 18,282 recent home sales that were passed to foreign buyers in Toronto and Golden Horseshoe area a month after the foreign buyer tax was implemented.
In April of this year, the Liberal government implemented a non-resident speculation tax together with other measures in an attempt to cool down the red hot Toronto real estate market. They were hoping that the new tax would help control home prices even with surging demand.
The figures shared recently only covered home purchases made between the 24th of April to the 26th of May. It showed that less than 5% of the 18,282 homes that changed hands were bought by non-citizens or foreign businesses.
The Need for More Homes
Ontario Real Estate Association head Tim Hudak shared that the province’s statistics are closer to 4.9% than 4.7% according to the TREB. He also added that in view of all these, the ultimate solution would be to increase housing supply in Toronto, not make it more difficult for certain groups of people to purchase. Hudak further said that homes like stacked flats, townhouses, or midrise buildings would be the best way to address the need for more homes.
It is to be noted that the province released their data on foreign buyers a day before a housing forum convened. That forum included community and economics groups and experts and met to talk about finding ways to address housing demand and making homes more affordable.
Rushed Government Decisions?
PC Finance Critic Vic Fedeli believes that the Liberals released the data to finally have something to base their decision on. He added that unfortunately, the rushed announcement made for an awkward situation for the government because they didn’t know yet the real impact of their policy at the time.
In a phone interview, Fedeli shared that the release was loosely put together and that they are concerned that there’s lack of preparedness and lack of data concerning the matter. He further said that the government should be dealing with the red tape and arcane regulations that are slowing down housing projects instead of raising taxes.
Ontario’s speculation tax covers Greater Toronto, Niagara, Hamilton, Kitchener-Waterloo, North to Barrie and east to Peterborough. It exempts a small group of non-citizens such as spouses of a permanent resident or citizen and refugees.
The tax is part of the province’s 16-point Fair Housing Plan that sought to give young families and individuals the opportunity to purchase a home and stabilise the housing market.
The Canadian Real Estate Association shared that they recorded a 25.3% drop in sales in Greater Toronto in the period between April and May 2017. They called it the biggest monthly drop recorded in the past 5 years.