Premier Kathleen Wynne announced 16 measures today to help increase supply in the Golden Horseshoe region. Hopefully, these measures will slow down the 30%+ increases, to the 10-15% range for the rest of the year. This won’t cause a decrease in prices, just a more gradual increase.
So for the Buyers out there, you may see some relief in the pre-construction sector. For the Sellers, not to worry, you’ll still be seeing the bidding wars and gains.
Here are a couple of the major measures announced and why they won’t curb housing prices:
15% Foreign Speculation Tax
This tax won’t affect the market much as it will only apply on home purchases by non-resident foreigners in the Greater Golden Horseshoe. It will not apply to new immigrants or those planning to live here. The Toronto Real Estate Board estimates that only 4.9% of residential real estate transactions are by foreign buyers and more than half of those are either buying for themselves or a family member. I concur with this estimate as virtually all of my ‘foreign’ buyer clients are either from other parts of the country or are buying for themselves or a family member living in the city.
Ban on Pre-Construction Speculators
This is something that the government has been trying to crack down on for years. This will be good buyers looking to get into the market and for the resale market, where investors will now go to invest in real estate.
Power for Municipalities to Impose a Vacant Home Tax
The Municipalities will wait and see how the real estate market will react to these new provincial measures before implementing a Vacant Home Tax. However, I am sure they will end up imposing such a tax in the near future because the measures announced today will not curb prices by much.
Other Measures Include:
– Expanding existing rent control systems to cover all tenants, including those buildings built after 1991
– Rebate of development cost charges to encourage building of more rental housing
– A move to identify provincially owned surplus lands that could be used for affordable and rental housing development
– $125-million, five-year program to encourage construction of new purpose-built rental apartment buildings by rebating a portion of development charges.
Overall, this will be good for the GTA because the 30-40% increases we are seeing this year are unsustainable. It will put us into bubble territory if it continues this way year-over-year and nobody wants that. For those who have been following me on social media, I have been a huge proponent of transforming single-family homes to multiple units as an investment vehicle. I continue to believe that it is a smart investment decision and now the government will make it easier to do so.
