An influential economist says that Ontario will have be obligated to implement a tax on foreign house buyers, not unlike the 15% surcharge recently slapped on home purchases in Vancouver.
Benjamin Tal of CIBC says the biggest problem facing policymakers with regard to hot housing markets in Toronto and Vancouver is a limit on the supply of new homes.
In both cities, there's a lack of undeveloped land to build new real estate in the downtown core.
One such tool is already underway in Vancouver.
Vancouver's housing market had been showing signs of a slowdown before the city's move in July to implement the 15% levy on housing purchases by foreigners "pushed it over the edge," as Tal puts it. According to the Real Estate Board of Greater Vancouver, house purchases declined by 26%in August compared with the same month a year earlier.
Another subsequent move, to tax vacant homes, is likely to cool off a housing market that was red-hot for more than a year.
A steep decline in prices may be jarring to recent buyers, but it's exactly what B.C. policymakers are hoping to accomplish, at least for now.
