Photo: Bruce Reeve/Flickr
With the provincial election fast approaching and the PCs ahead in the polls by a whopping 21 points, voters are starting to wonder about what a Doug Ford premiership would look like for Ontario. One potential change on the table? Ford has mused about removing the GTA foreign buyer tax.
Speaking with the Globe and Mail last week, Ford said that he didn’t like seeing the government involved in the housing market.
“I believe in the market dictating,” he said. “The market, no matter whether it’s the stock market or anything, it will always take care of itself — supply and demand.”
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The current 15 per cent foreign buyer tax was introduced in April, as part of the province’s Fair Housing Plan, designed to dampen Toronto’s housing market as prices reached record highs.
Since the plan was introduced, the market has cooled dramatically, something which industry commentators have attributed to the psychological effects of the plan, rather than its actual impact on foreign investment.
Regardless of why the tax has been successful, BMO chief economist Douglas Porter doesn’t understand why Ford would risk removing it now.
“How that can possibly be a top priority, especially given very compelling evidence that said tax played a huge role in deflating the Toronto housing bubble in the past year, is a mystery,” he writes in a recent note.
But, he’s also quick to note that removing the tax would be unlikely to drastically alter the course of the market. The new mortgage stress test, introduced on January 1 for uninsured borrowers, has already cooled the market in the first two months of the year. Porter speculates that it would likely keep things balanced if the foreign buyer tax was removed.
“But I wonder, what’s the advantage?” he asks. “Why risk it?”
Current predictions for the GTA housing market call for a slow upward creep in activity heading into the second half of 2018.
“It’s worth nothing that sellers warmed up to the market in [February],” writes RBC senior economist Robert Hogue, in a recent note. “New listings rose in February in Toronto after declining markedly in January. This could be an early sign of pick-up in buyer activity in the coming months.”