TD Economics’ chief economist Beata Caranci warns that the market is set to remain elevated with a 25 per cent rise in prices as “speculative forces” exacerbate demand unless policy measures are implemented to cool the market.
Caranci sees a slower pace for the market in 2018 amid higher mortgage rates and a limited supply of affordable homes but she notes that without clear insights into the effects of speculative buyers it is difficult to make an accurate prediction.
She is not convinced that a foreign buyers’ tax would solve the problem as it would not tackle domestic speculators.
Meanwhile, economists from Scotiabank are calling for a tax on flipping of properties in the Toronto market to make it less profitable to speculate.
Jean-Francois Perrault and Adrienne Warren agree with Caranci in their report, writing that a tax on foreign buyers is not the answer but a tax on flipping a home within a period of time might be.
The pair are also calling on the government to collect outstanding capital gains tax on investment properties, something that Ottawa is moving towards with new reporting requirements on tax forms.
All three economists draw comparisons with previous periods of elevated home prices and the painful contraction that typically follows.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
The ever-rising home prices in Toronto are set to gather pace and require policy measures to curb speculation according to economists.