Photo: James Bombales
While onlookers might think Ontario’s recently implemented foreign buyers’ tax has successfully cooled its red hot housing market, many industry players disagree.
PwC and the Urban Land Institute (ULI) released their Emerging Trends in Real Estate 2018 report last week, which surveyed more than 2,400 industry experts including investors, fund managers, developers, property companies, lenders, brokers, advisers and consultants.
The majority of industry players surveyed were highly skeptical that the foreign buyers’ tax would have a long-term impact on housing affordability in Ontario.
“Growth will continue to drive needs… no regulation will stop that,” reads a statement from an anonymous interviewee quoted in the report.
The Ontario government introduced its Fair Housing Plan, complete with a foreign buyers’ tax, in April. The 15 per cent tax applies to all non-resident purchases made in the Greater Golden Horseshoe.
The tax comes on the heels of British Columbia implementing its own foreign buyers’ tax on the Metro Vancouver market in the summer of 2016. While the tax initially pushed prices down, they have since rebounded and now exceed pre-tax levels.
The report found that many industry players believed the tax would have little long-term impact on foreign buyers’ decision to invest in the Ontario market.
“Most interviewees think that overseas buyers still see Canada as a safe haven and an attractive place to live, so they will continue to buy in the Canadian market regardless of the new taxes,” reads the report.
Many of the report’s interviewees believed the government should stop interfering with the market through regulation, and instead focus on the lack of serviceable land available to developers, which could limit supply and drive up prices.
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In Q2 of 2017, the number of completed and unsold dwellings nationally per 10,000 people was 4.2 units, the lowest level in six years. This lack of supply coupled with a strong demand for housing in markets like Toronto, could cause prices to surge.
“One interviewee stated that government policy ‘is the largest issue impacting real estate,’” reads the report.
Moving forward into 2018, the report predicts that demand will remain high in the Greater Golden Horseshoe, as investors continue to seek stable long-term opportunities. This, coupled with steady immigration, will drive prices higher moving into the new year.