HOUSE POOR

Brokers say new foreign buyer tax won’t fix Toronto’s affordability problem,

Toronto Real Estate Board insists housing shortage at root of affordability issue

Imposing a foreign buyers tax to cool scorching home price gains in Toronto won’t solve the underlying problem, brokers say, as Ontario provincial officials reconsider the option.

The real problem in Canada’s biggest city is a supply shortage, which is at its lowest in more than 15 years, the Toronto Real Estate Board said in a statement Friday.

“Imposing a tax on foreign buyers will not have the desired effect of cooling the housing market and could create adverse effects,” Larry Cerqua, president of TREB said in the statement. “It will do little to correct the real issue impacting housing affordability, which is the lack of available housing supply.”

The industry group’s comments come after Ontario Finance Minister Charles Sousa said on Thursday he was now looking at imposing a tax on purchases to cool price gains that have exploded in recent months. The average cost of a home in the city and its suburbs jumped 28 per cent in February from a year earlier to $875,983, the sixth straight month of above 20 per cent growth.

“A year ago I was thinking, ‘Let market forces prevail,’ ” Sousa said, according The Canadian Press. Now, he’s concerned about the ability of people to enter the market with bidding wars “everywhere you go.” Sousa said he is considering a number of options for next steps, and a foreign tax is just one.

The real estate board said a survey it conducted last year showed only about 5 per cent of purchases carried out by its members were on behalf of a foreign buyer and 80 per cent of buyers purchased a home as a residence, a place for another family member to live in, or as an investment to rent out, which helps increase supply.

The provincial government should work with municipalities and industry to boost availability, Cerqua said.