Feds applaud plan to cool Toronto housing market

The federal government welcomes Ontario’s move to tax foreign home buyers in and around Toronto, but says it won’t be replicated on a national level because it’s unnecessary in the vast majority of the country.

Finance Minister Bill Morneau said his government was consulted in advance of the move by the Ontario government, which announced a 15-per-cent tax on foreign purchases in the hope of cooling a scorching-hot Toronto housing market.

It was one of multiple moves announced this week as part of a housing plan that replicates Vancouver’s foreign-purchase tax, expands rent control, allows municipalities to tax vacant properties and creates new layers of scrutiny for speculative purchases.

“There was nothing that surprised us in their announcement. We had discussed in broad strokes the measures they were moving forward with,” Morneau said Friday during a visit to Washington.

“The measures around trying to reduce speculation in the market, we think, are positive ... We do believe there’s an important issue around psychology in the market that needs to be addressed - and Ontario is making progress.”

This week’s announcement generated considerable international media attention, with headlines from outlets such as the BBC and the New York Times about the Canadian city’s effort to cool its housing market.

But Morneau is adamant: there will be no similar plan at a national level.

That’s because the conditions that drove Toronto home prices up more than one-third in a year to an average value above $1 million simply don’t exist in most places.

“We have very different markets in different parts of the country. So the measures being taken are dealing with specific market conditions in places like Toronto and Vancouver,” Morneau said.