Talk of a potential foreign buyer tax in Toronto is heating up, but it’s already gained a few opponents.
"When the idea of introducing a foreign buyer tax in Ontario surfaced last year, TREB cautioned it would be a knee-jerk reaction before knowing whether a problem existed. There was little in the way of reliable data on the issue,” TREB President Larry Cerqua said. “To better understand the foreign buyer issue, TREB commissioned an Ipsos survey on foreign buying activity in the GTA, the results of which show that concerns about the effect of foreign buyers on the GTA market are widely overblown."
Chatter about a potential foreign homebuyer tax in Toronto has picked up amid skyrocketing home prices in the city, with many industry players suggesting foreign money is having an influence on those price gains.
Ontario’s Finance Minister admitted last week the province is considering it as a means to cool Toronto’s red hot housing market.
“A year ago I was thinking, ‘Let market forces prevail,’” Finance Minister Charles Sousa said. “But now I’m concerned about … the ability of people to enter the marketplace. [There are] bidding wars everywhere you go, it appears, and I’m sensitive to that.”
The average GTA home price jumped 27.7% and the average detached home in Toronto now costs more than $1.5 million.
However, TREB argues foreign buyers are predominantly interested in purchasing homes as residences, not as investments.
It cites a 2016 study it conducted that found an estimated 4.9% of transactions are for foreign buyers and that 80% of those buyers purchase as a primary residence.
"The 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's economic success,” Cerqua said. “We can't forget that immigration is the key driver of population growth in the GTA and, therefore, a key driver of economic growth as well. Imposing a tax on foreign buyers will not have the desired effect of cooling the housing market and could create adverse effects on the national, provincial and GTA economies. It will do little to correct the real issue impacting housing affordability, which is the lack of available housing supply.”
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