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Foreign buyers of real estate at 4.7 per cent of sales: largely unchanged since last year

New data from the Ontario government seems to indicate that only 4.7 per cent of properties sold between April 24 and May 26 were bought by foreign buyers. The new 15 per cent tax on international-buyers was announced April 20th, but seems to have had no impact. Only 859 sales in this period were foreign buyers.

 

Kathleen Wynn announcing rules designed to cool the market.

 

This is not a significant change from numbers released by the Toronto Real Estate Board in fall of last year, which indicated 4.9 per cent of transactions came from international buyers. There was no apparent impact from the 15 per cent speculation tax brought in as part of the 16-point package of changes from the Ontario government designed help with affordability.

Charles Sousa, Ontario’s Finance Minister.

Ontario Finance Minister Charles Sousa commented: “This indicates to me that the degree of foreign buyers is not as intensive as many may have contemplated.” The virtually unchanged foreign buyer percentage, in the context of the drop in sales numbers overall, seems to indicate the Ontario government measures have only temporarily frightened the market into “wait and see” mode.

Vic Fedeli, the finance critic for the PCs in Ontario said, “I’m glad they now have some science because they made a decision based on a photo op. They didn’t have data, they rushed it out.”

Premier Wynn announces speculation tax on April 20, 2017:


 

Supply is the biggest issue

Most experts say the tactics were poorly targeted. The key issue appears to be supply — and not just resale listings. There are multiple supply issues, but a key one is “developer red tape” that chokes speed to market and incentive to build.

In all there were 18,282 real estate deals in the GTA and Golden Horseshoe between April 24 and May 26. On the other hand the overall drop in sales between April and May was significant — the biggest in the last five years, on a monthly basis. Rather than controlling speculative buying, the new measures so far seem to have simply cooled the entire market.

British Columbia implemented a similar plan under Premier Christy Clark which had a similar chilling effect on the market, although the market quickly recovered.

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