{"id":10553,"date":"2017-03-10T11:38:23","date_gmt":"2017-03-10T16:38:23","guid":{"rendered":"http:\/\/www.zoocasa.com\/blog\/?p=10553"},"modified":"2017-03-13T13:12:56","modified_gmt":"2017-03-13T17:12:56","slug":"ontario-government-to-consider-foreign-buyer-tax","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/ontario-government-to-consider-foreign-buyer-tax\/","title":{"rendered":"Ontario Government to Consider Foreign Buyer Tax"},"content":{"rendered":"

Could a tax on foreign buyers, similar to the one implemented in Vancouver last summer<\/a>, be a possibility in Ontario? The option is on the table according to Finance Minister Charles Sousa, who stated Thursday he\u2019s considering measures to temper rising real estate prices in province.<\/p>\n

He says the fact that Toronto home prices have increased 27.7% on average over the last year and recent big bank bubble warnings, have raised fresh concern on the issue, despite the provincial government\u2019s previous stance against a foreign buyer tax.<\/p>\n

\u201cA year ago I was thinking, \u2018Let market forces prevail.\u2019 But now, I\u2019m concerned about\u2026 the ability of people to enter the marketplace,\u201d he stated. \u201c(There are) bidding wars everywhere you go, it appears, and I\u2019m sensitive to that. I\u2019m sensitive to the degree of fast appreciation in the short term and what will that do over the long term.\u201d<\/p>\n

Sousa adds that it\u2019s not just Toronto\u2019s market that\u2019s cause for concern, as home sale prices heat up across the Golden Horseshoe; the Hamilton real estate<\/a> market is anticipated to be this year\u2019s hottest, while a previous report finds price overflow from Toronto reaches as far as the Niagara region.<\/p>\n

However, he emphasizes the need for caution, as tinkering with one market could have consequences for others. \u201cIf there\u2019s an appreciation happening and you start to poke a bubble, to what extent am I then implication something with unintended consequences of other parts of the region?\u201d he said. \u201cIf we do something in Toronto, what does that mean for Hamilton or Guelph?\u201d<\/p>\n

Related Read: Toronto House Hunters Searching As Far As Niagara<\/a><\/strong><\/p>\n

TREB and OREA Contest Need for Tax<\/h2>\n

The idea of taxing out-of-country buyers is firmly opposed by several regional organizations including the Ontario Real Estate Association, which says lack of supply is the true issue behind Ontario real estate price appreciation, not speculative foreign buyers.<\/p>\n

\u201cThe main culprit behind rapidly rising home prices in the GTA\u2019s unbalanced market is housing supply cannot meet demand \u2013 not foreign buyers. Home affordability needs to be addressed before millennials are completely priced out of the market,\u201d stated OREA CEO Tim Hudak.<\/p>\n

OREA\u2019s stance is shared by the Toronto Real Estate Board, which points to results from its previous survey<\/a> that find foreign purchasers account for only 4.9% of the market, and that 80% are purchasing homes to use as a principal residence.<\/p>\n

In response to Sousa\u2019s comments, TREB released a statement on their position, re-iterating that housing supply is at a 15-year low and condemning what would be a \u201cknee-jerk reaction\u201d.<\/p>\n

\u201cThe fact that most foreign buyers are looking to purchase a home for their family, for personal use, or to provide a tight rental market with much needed supply is something to be encouraged as these actions are essential to Ontario\u2019s economic success,\u201d stated TREB President Larry Cerqua.
\n\u201cWe can\u2019t forget that immigration is the key driver of population growth in the GTA and , therefore a key driver of economic growth as well.\u201d<\/p>\n

He adds that a foreign tax would not only fail to improve affordability, but would also have a negative impact on the national, provincial and GTA economies.<\/p>\n

TREB reports that new listings in the GTA declined 12.5% in February, with available inventory at the one-month mark and lower in the most-in-demand neighbourhoods.<\/p>\n

\u201cDemand-focussed policy changes will not provide long-term solutions for an affordable housing market,\u201d stated\u00a0TREB\u2019s Director of Analysis Jason Mercer, who adds that the provincial government should be instead working with municipalities to improve supply via assessing land-use designations, and streamline the approval process for development and permits.<\/p>\n

Report Reveals Foreign Buyer Motivations<\/h2>\n

One of the key issues is that there isn\u2019t hard data on the extent foreign purchasers impact the Canadian market, though a number of bodies, including the CMHC and\u00a0TREB have tried. Now, a new report from Sotheby\u2019s also minimizes the speculative potential of Chinese buyers.<\/p>\n

Compiled with data from Juwai.com, a popular Chinese website used to view and purchase Canadian real estate, the report, titled \u201cChina to Canada: International Home Buyer Insights<\/a><\/em>\u201d indicates the following reasons behind foreign purchasers:<\/p>\n

40% – Primary residence<\/p>\n

25% – Investment property to rent out<\/p>\n

15% – Bought for a family member to live in<\/p>\n

10% – Investment property<\/p>\n

10% – Don\u2019t know<\/p>\n

\u201cPeople look for someone to blame. A very convenient person to blame is the foreign buyer,\u201d said Sotheby\u2019s CEO Brad Henderson. \u201cWe\u2019ve seen that happen in Vancouver in particular, and it\u2019s starting to happen more in Toronto.\u201d<\/p>\n

The report also found the average property searched had a value of $428,928, and that education was cited as the top reason for moving to Canada at 40%, followed by own use (37.1%), investment (27.2%), and immigration (12.7%).<\/p>\n

Do you think Ontario should introduce a foreign buyer tax? Share your thoughts with us on Facebook<\/a> and Twitter<\/a>!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Could a tax on foreign buyers, similar to the one implemented in Vancouver last summer, be a possibility in Ontario? The option is on the table according to Finance Minister Charles Sousa, who stated Thursday he\u2019s considering measures to temper rising real estate prices in province. He says the fact that Toronto home prices have […]<\/p>\n","protected":false},"author":39,"featured_media":10555,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"footnotes":""},"categories":[33,181,587],"tags":[],"class_list":["post-10553","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-news","category-toronto-real-estate","category-vancouver-real-estate"],"yoast_head":"\nOntario Government Consider Foreign Buyer Tax | Zoocasa Life<\/title>\n<meta name=\"description\" content=\"Ontario Finance Minister Charles Sousa has announced a foreign buyer tax may be back on the table, as the province looks to cool housing market demand.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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