TORONTO – Ontario Finance Minister Charles Sousa confirmed Monday he plans to include housing affordability measures in his upcoming budget.
Premier Kathleen Wynne has said her government is working on a “comprehensive set of plans,” to deal with rising home prices in the Greater Toronto and Hamilton Area (GTHA), as well as rising rental rates.
Sousa said he’d like to include those plans in the spring budget.
There is a “suite of options” available to Ontario, but the province must be careful to avoid “unintended consequences” from those measures, he said.
READ MORE: Trudeau government looks to provinces to cool red-hot housing markets in Toronto, Vancouver
Sousa also spoke about pressures on both the supply and demand side of the GTHA housing market.
“Demand is high for a number of factors,” he said. “Could be speculators, could be people from outside the country, it could very well be the many who are now moving into Ontario creating that demand.”
“The degree of supply is in question and how to expedite that is also something we’re trying to address,” he added.
The housing package in the budget will concern the red-hot housing market in the GTHA, while taking into account different circumstances in the rest of the province, Sousa said.
READ MORE: Ontario calls on Ottawa to change tax rules to address real estate speculation
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Just prior to the release of the federal budget, Sousa had asked Finance Minister Bill Morneau for changes to the taxation of capital gains on the sale of homes that are not classified as a primary residence, as a way to address speculative investors flipping homes.
Speculative investing in the real estate market – buying a home in the hope of turning a profit rather than to live in – is believed to be one of the culprits behind the soaring house prices.
While Sousa’s wish wasn’t granted in the federal budget, Morneau did not rule out capital gains changes in the future.
Earlier this month, Sousa said a foreign buyers’ tax was back on the table in Ontario.
READ MORE: Ontario reconsiders foreign home-buyer tax
He’d announced a year ago that the province wouldn’t pursue that option, but said he was “keenly aware” of how quickly house prices have risen in the intervening time.
The average price of a detached home in Toronto broke the $1.5 million mark for the first time last month, reaching $1,573,622 in the City of Toronto – 29.8 per cent higher than a year ago.
The average selling prices of all homes in the Greater Toronto Area was $875,983 in February, 27.7 per cent higher than last year. In the City of Toronto the average across all homes was $859,186, up 19.2 per cent.
Figures from the B.C. government show a drop in real estate transactions in the Vancouver area after the provincial government brought in a 15 per cent tax on foreign buyers last August. However the market had been showing signs of softening prior to the tax after months of scorching sales.
READ MORE: Toronto is a city where even the ‘rich’ can’t afford an average-priced house: BMO
The Toronto Real Estate Board urged the Ontario government not to implement a tax on foreign buyers, arguing that it would do little to address the problem of rising house prices.
The Ontario Real Estate Association said the overwhelming majority of foreign home buyers are immigrants or permanent residents looking for a home, not speculators.
“The main culprit behind rapidly rising house prices is the GTA’s unbalanced market – housing supply cannot meet demand – not foreign buyers,” association CEO Tim Hudak said in a statement earlier this month.
A report by Ryerson University’s City Building Institute – titled “In High Demand” – favoured a tax on foreign buyers similar to the one introduced in Vancouver, but suggested it should be implemented in addition to a “progressive surtax” on expensive homes owned by people who aren’t paying income tax, including people with foreign capital.
No date has been set for the Ontario provincial budget, but it’s expected in the coming weeks.
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