This week’s top real estate news in Ontario and how your real estate business could be affected.
Tax on foreign homebuyers would be ‘horrible,’ Toronto real estate lawyer warns
A Toronto real estate lawyer warns introducing a tax on foreign homebuyers would be devastating for the Toronto housing market. His warning came Tuesday after a prominent economist said it was only a matter of time before the surcharge would come into effect in the Greater Toronto Area. “So much of [Toronto’s real estate] is owned by foreign owners, and we welcome their investments,” said Toronto real estate lawyer Bob Aaron. “It’s important to our economy to have foreigners investing here. If we cut off the supply it’s going to say Canada is no longer open for business, we’re closed for business, we don’t want your money; that’s going to reverberate throughout the economy.”
Canada’s real estate sector at high risk of money laundering, report warns
Of particular concern are real estate schemes in which a foreign or domestic criminal provides cash to a local buyer, or more sophisticated schemes where loans and mortgages are combined with lawyers’ trust accounts to move money around quietly. The Canada Revenue Agency is probing questionable transactions in the Vancouver real estate market, part of a wider study the federal government is doing into ever-rising housing prices there and in Toronto.
Ontario will need to implement foreign buyer tax on housing, CIBC says
In a recent note to clients, Benjamin Tal of CIBC says the biggest problem facing policymakers with regard to hot housing markets in Toronto and Vancouver is a limit on the supply of new homes. In both cities, there’s a lack of undeveloped land to build new real estate in the downtown core. “The main reason behind higher prices in the [Greater Toronto Area] is a policy-driven lack of land supply,” Tal said. “And with no change on that front, policymakers have to use demand tools to deal with what is essentially a supply problem.”
Canadian homes are still cheap, at least in foreign currency: Bank of America
Bank of America Merrill Lynch Global Research on Wednesday launched coverage of Canada’s mortgage finance system, policy infrastructure and securitization channels and one of its findings, which may shock some Canadians in Toronto and Vancouver, is that the market is not all that pricey. “Homes are cheaper on both a U.S. dollar adjusted and Chinese renminbi basis than in 2010-2014. Despite the high rates of home price appreciation, the continued appeal of Canadian real estate is reflected when adjusting home prices for the substantially weaker Canadian dollar,” the firm writes in its report.
Toronto leads Canadian home prices to 1.5 per cent month-on-month uptick in August
Teranet tracks home prices in Canada using its Teranet-National Bank National Composite House Price Index, and this month’s update shows that the index rose 1.5 per cent from July to August — that’s the third-largest August increase since the index was started in 1999. The index was also up 11.4 per cent year-over year, the most it’s risen in 12 months since July 2010.
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