While several quarters have voiced strong opposition against the Ontario government’s potential implementation of a foreign buyers’ tax similar to that of B.C., other observers and academics pointed out that such a measure will prove useful in moderating Toronto’s accelerated home price growth.
The Vancouver market’s slowdown in the wake of the mid-2016 imposition of the tax “likely contributed to the cooling in prices” observed since then, Bank of Nova Scotia senior economist Adrienne Warren wrote in a recent report.
Simon Fraser University school of public policy professor Joshua Gordon argued that foreign capital is a crucial factor in Toronto’s price increases, like what happened in Vancouver.
“When you have a pretty tight market, just adding a few extra buyers can really put a lot of pressure on the system,” Gordon told The Globe and Mail.
“We may need actions that are similar to Vancouver,” Royal Bank of Canada CEO Dave McKay agreed, adding that the B.C. tax might have scared off overseas investors and compelled them to look at other hot Canadian markets such as Toronto.
“If policy makers leave this market to its own devices, there is a real risk that a still-manageable bubble is pumped by rampant speculation into something much more dangerous,” Bank of Montreal chief economist Douglas Porter stated earlier this month.
“We’re not saying that an incremental property transfer tax levied on foreign buyers is the silver bullet,” Warren Lovely of National Bank Financial Inc. said. “But its time may have come.”
Price of homes sold in Greater Toronto Area soars 27.7%, real state board says
Proposed class action against B.C. says foreign buyers' tax unconstitutional
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