Canada's Condominium Magazine
In another of several announcements promising action on the Ontario housing market — this one promising “in the coming week” — Ontario’s Finance Minister Charles Sousa revealed more details of the pending plan to rein in speculative market pricing in the GTA area. A combination of low supply and excessive demand has thrust house pricing up 1/3 in value over last spring.
Co-announced with federal Finance Minister Bill Momeau and Toronto Mayor John Tory, the pending measures also promise expansion on rent controls to include rental units built after 1991.
“In the coming week, the Ontario government will announce a suite of measures designed to increase supply and address demand. We’ve developed a comprehensive action plan to help stabilize the housing market,” Sousa said.
The budget will land on April 27. Sousa clearly signaled the detailed plan is ready to go, after meeting Tuesday with the Federal Finance Minister and Toronto Mayor.
A Fine Balance in the Hot Spring Market
Government intervention runs the risk of over-compensating or of devaluing property values. The ideal balance would be to cool inflationary pressures by reining in speculative investors, while not dramatically impacting value of properties for home-owners.
Both Sousa and Tory and previously mentioned targeting “real estate bidding wars.” The Federal minister has already declined to increase the capital gains tax rate on investment properties, leaving fewer available tactics.
Sousa was clear on the urgency: “Ontarians can’t afford to wait, we need to act now.”
“There isn’t any one single thing a government can do”
Premier Kathleen Wynn made these remarks last week, hinting at multiple tactics and measures. Some of the options available to the government fall into the broad categories of:
- taxing investors
- easing of demand
- boosting of supply tactics.
Various concepts have been floated — and most are still possible in the new budget:
- taxes focused on investors (Sousa hinted at this Thursday when he said people with “deep pockets are crowding out families who are trying to put down roots.”)
- foreign buyers tax: on the table because the Federal government ruled out capital gains tax rate
- extra taxes on flipped properties
- prevent bidding wars
- increasing transparency in bidding
- eliminating buyer/seller same agent (allowed in Ontario currently)
- vacant homes taxed (especially favoured by John Tory, Toronto’s mayor)
- tighten up loan conditions for investors
- improve density and speed up approvals for developers to boost supply
- make more land available for housing development.