Ontario sets tax on foreign buyers to cool Toronto housing market

Thu Apr 20, 2017 4:06pm EDT
 
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By Matt Scuffham

TORONTO (Reuters) - Ontario's provincial government on Thursday introduced a 15 percent tax on property purchases by foreign buyers as part of 16 measures designed to cool Toronto's red-hot housing market.

A rapid acceleration in home prices in Toronto had prompted some economists to voice fears that the real estate market in Canada's most populous city is in a bubble and raised concerns about the ability of first-time buyers to afford a home.

Ontario's Liberal government, trailing the Progressive Conservatives in opinion polls ahead of an election in June 2018, had also come under pressure to respond to growing public frustration about the role foreign buyers are playing in the Toronto market.

"I have three millennials at home, adults in their 20s. They wonder how they are ever going to get their starter home," said Ontario Finance Minister Charles Sousa.

"I think the public is concerned about speculation and speculators crowding out families that want to own a home," he added in an interview.

Sousa said the tax would take effect on Friday.

Toronto prices rose 33 percent in March from a year earlier and the average price of a detached home topped C$1.2 million ($903,000) last month. Bank of Canada Governor Stephen Poloz has warned the level of price increases is unsustainable.

Sousa acknowledged the government faced a difficult balancing act finding policies that would stabilize prices without damaging the market.   Continued...

FILE PHOTO --  A "Sold over asking" sign is on display on a house for sale in Toronto's housing market in Toronto, Ontario, Canada, October 21, 2016.  REUTERS/Hyungwon Kang/File Phot