Ontario’s request to the federal government to address housing affordability went largely ignored – but that means the province will likely take matters into its own hands
“Something should be done,” Ron Butler, a broker with Butler Mortgage, told MortgageBrokerNews.ca. “Let’s face it: If 25% goes on for two years or two-and-a-half year, the collapse will be much bigger – if you go up 70% over the course of two-and-a-half years, then the drop would have to be 50% instead of 25%.
“It’d be nice if something is done.”
Ontario Finance Minister Charles Sousa urged the federal government to address housing affordability in Toronto prior to the release of the federal budget, arguing in favour of a special tax on home speculators.
“My primary focus is to address the concerns of middle class Canadians who are worried about buying their first home,” Sousa wrote in a letter to Federal Finance Minister Bill Morneau earlier this month. “Additionally, it is important that the housing market remains stable, meaning that borrowers and lenders are resilient and able to withstand economic shocks.”
For his part, Butler questions just how effective such a measure would be.
“[One] consideration might be a speculation tax. But how do you frame that?” he said. “How do you word it and how do you make it work?”
Still, the government is expected to do something – and Sousa said as much.
Just what that policy looks like remains to be seen. Many, however, are suggesting a foreign buyer tax, similar to the one implemented in Vancouver last year.
“There is no rational way that a housing market can increase in excess of 25% year-over-year, that’s not possible. It’s not survivable; it’s economic madness. It’s just hopeless,” Butler said. “Something needs to be done. Foreign buyers’ tax worked in Vancouver to the extent that purchase volume dropped a lot, like 45%.
“My instinct is they will do something. It might turn out to be a nothing. They’re headed for an election, the premier has a 14% approval rating; so my thought is things will be said, policies will be approved, but whether it will actually do anything, I don’t know. You can bring in a lot of things that look good but don’t actually do anything.”
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