RBC predicts government’s interference into Toronto real estate market
Reuters said the Royal Bank of Canada expected policymakers to implement new measures on cooling down Toronto’s hot real estate market after it showed record high sales last year.
"The possibility of a policy intervention towards housing risks in Toronto is getting stronger," – RBC’s economists noted in the recent report.
The bank didn’t say if the future changes would come from the federal government, Ontario provincial government or Canada's financial regulator.
As you know, in 2016, Canada's finance ministry tightened regulations for mortgage providers. In addition to it, the provincial government of British Columbia implemented a 15% tax for foreign homebuyers in attempt to reduce the prices in Vancouver and make properties affordable for all citizens.
First-time homebuyers will not face higher Land Transfer Tax so far
The Toronto Real Estate Board (TREB) is satisfied with the Budget Committee’s decision not to raise the Land Transfer Tax (LTT) for first-time homebuyers. In the same time, TREB still worries about the suggestion to increase the LTT by $750 for other buyers. It also says new changes are necessary for the first-time buyers.
"The City's Budget Committee has made the right decision by not raising the LTT for the first-time buyers. We’ve been expressing our concerns about these proposals since they first appeared last year. And we’re very glad the City Hall has listened to us. We believe that Mayor Tory understands the importance of making Toronto real estate affordable for everyone, especially for the first-time buyers, and we support such decisions," – noted Larry Cerqua, TREB’s President.
The City's Budget Committee reviewed the suggestion to raise the City's Land Transfer Tax by $475 for all first-time buyers and by $4,475 – for some of them. Moreover, it was proposed to increase the LTT by $750 for all other homebuyers.
Hot Toronto housing market raises activity in surrounding cities
The latest report by Canada Mortgage and Housing Corporation (CMHC) shows that growing real estate prices in the GTA are affecting also the surrounding cities.
Sharply rising prices for single-family houses in the GTA are making buyers switch to other areas nearby.
“We have proof that growing single-family home prices in the GTA encourage buyers to purchase properties nearby, e.g. in Hamilton, Barrie and Guelph, where real estate is much more affordable,” - Jean-Sébastien Michel, principal of the CMHC’s Market Analysis Centre, noted.