New housing rules ‘shock to the market’
Hard to predict what foreign buyers’ tax will do
TORONTO — New provincial measures to cool the rollicking Toronto region housing market could finally prompt harried home buyers to take a breath and figure out how the new rules affect their personal circumstances long-term.
It is difficult to predict how the 15-per cent foreign buyers’ tax announced by Premier Kathleen Wynne will impact the market, says the Re/Max 2017 Spring Market Trends Report published Tuesday.
While a similar tax turned down the heat in Vancouver, Toronto is a bigger city and foreign investment isn’t considered to be as big a factor here, although data is scarce.
Re/Max says it’s safe to assume, however, that the new Ontario measures that apply to the Greater Golden Horseshoe will impact the middle class as well as the luxury end of the market.
“It’s a shock to the market,” said Pamela Alexander, CEO of Re/Max Integra Ontario-Atlantic Canada.
“Whenever there’s any kind of shock to the market — whether they raise interest rates or put new mortgage rules in — there’s always this pause,” she said.
“This is probably going to have its period of a few months of adjustment and then the market will return to its new normal,” said Alexander, who praised most of the measures in the Liberal government’s 16point plan.
She expressed reservations, however, about the expansion of rent controls to units occupied after 1991.
Some investors who have been buying condos over the past 15 years may see this as a trigger to exit the market, said Alexander.
“People may say, ‘I’ve had a great run, I’ve capitalized on the upward swing, but I don’t know how much further that upward swing is going to go and I don’t know if I can manage this with a profit with the new caps in place,’” said Alexander.
In the Toronto area, where the cost of a home rose $200,000 on average in the first quarter of this year over last — to $873,631 — buyers are on the hunt for affordability, says the Re/Max report. A survey of about 7,000 of the company’s active agents and brokers in the Toronto-region suggests that increasingly means looking outside the downtown.
Purchasers are increasingly frustrated with the lack of homes on the market and the high costs, said Alexander.
“They’re realizing, after being let down, they are just at this point of time they’re not going to be able to find what they’re looking in the area they most desire and they’re just going to have to expand the sphere of where they’re looking,” she said.
That trend is driving prices as far away as Windsor and Kingston, says the report.
In Windsor, prices rose 17 per cent on average year over year in the first quarter, up $35,554 to $246,775. In the same period, Kingston home prices rose 11 per cent to $323,343 on average up $32,751.
New taxes aimed at curbing speculation by foreign buyers helped push Greater Vancouver prices down 11 per cent in the first quarter since the same period last year. The average price there was $969,900, accord-
ing to Re/Max.
An online Leger panel of 1,570 Canadians showed that 68 per cent of Ontario residents consider the location of their home to be more important than the style or size of the residence.
Price, followed by access to green space and parks, and proximity to work were the primary home-buying considerations, according to the poll respondents.
Among millennials (aged 18 to 34), proximity to work edged out access to green space as the second most important factor in purchasing.
Forty-six per cent of Canadians and Ontarians said they felt like they could buy the kind of home that suits their families’ needs. The Leger survey, conducted between March 27 and 30, is considered accurate within 2.5 per cent 19 times out of 20.