TORONTO – The number of home purchases by non-Canadians appears to be dropping in an Ontario region, including Toronto, that is subject to a foreign buyer tax.
The 15 per cent tax was imposed in April on buyers in the Greater Golden Horseshoe area – stretching from the Niagara Region to Peterborough – who are not citizens, permanent residents or Canadian corporations.
It came as the housing market in the Toronto area and beyond saw year-over-year price increases of over 30 per cent.
The government previously released data from April 24 to May 26, which showed that about 4.7 per cent of properties were bought by people who weren’t citizens or permanent residents.
The latest set of numbers covers May 27 to Aug. 18 and shows the percentage of foreign transactions in the region dropped to about 3.2 per cent.
In Toronto, the percentage dropped from 7.2 in that first month to 5.6 per cent in the subsequent three months. In York Region, just north of Toronto, 9.1 per cent of sales in the first month were by foreign buyers, dropping to 6.9 per cent in the next three months.
Finance Minister Charles Sousa credits the government’s 16-part housing plan, which included the tax, with spurring those decreases.
“So I would say yes, it is working,” he said Thursday, adding that the measures have also brought some stability to the real estate market.
The latest figures also looked outside the Greater Golden Horseshoe region, and in the first month of the tax foreign transactions represented 1.5 per cent of sales, while in the following three months it was nearly the same, at 1.6 per cent.
Overall, from April to August, the average foreign buyer activity in the region was 3.5 per cent.
Ontario’s foreign buyer tax followed a similar one in Vancouver last summer that had a cooling effect on the red hot housing market, however since then sales have rebounded.
The Canadian Real Estate Association is expected to release national home sales figures for August on Friday.
Sousa said he is keeping a close eye on the Vancouver market.
“We would anticipate that’s a matter of supply and demand,” he said.
“The demand for Ontario investment is high, certainly, but we also have greater supply coming onto the mix.”
Ontario’s tax applies to purchases made on or after April 21, though there are exemptions for refugees, foreign nationals under the Ontario Immigrant Nominee Program, or if the property is jointly purchased with a spouse who is a Canadian citizen, permanent resident, refugee or exempt under the Ontario Immigrant Nominee Program.
Rebates will be available to people who subsequently get citizenship or permanent resident status, as well as foreign nationals working in Ontario and international students.
With files from Craig Wong