

Chris Fox, CP24.com





City officials are continuing to watch the impacts of a real estate tax on foreign buyers in Vancouver “very closely” but will need more data to determine whether such a move could be effective in slowing down the rapid price gains in Toronto, Mayor John Tory says.

Tory made the comment to reporters following a meeting with Vancouver Mayor Gregor Robertson at city hall on Thursday afternoon. Robertson is in Toronto ahead of a summit on housing on Friday.

“We are obviously watching the impacts of that policy initiative (the foreign buyers tax) very carefully but we need to make sure that we understand the realities of our local housing market before we decide if such an action as that is necessary or for that matter appropriate in the Toronto market,” Tory said. “It is only responsible for us to understand what the challenge is here in the Toronto real estate market before we decide to advocate for some particular tool to address it.”

In August, the British Columbia government introduced a 15 per cent tax on foreign buyers purchasing residential property in Vancouver in an attempt to slow the rapid price gains in that city.

Since that tax took effect, data has shown a decline in sales activity, however prices have held steady.

Meanwhile, in Toronto the real estate market continues to set records, prompting many to wonder whether a similar tax is needed here.

Transactions in the month of August were up 24 per cent from the previous year and the average price for all housing types rose 18 per cent to $710,410. The average price of a detached home in Toronto in August was $1.2 million during the same period. .

Speaking with reporters, Tory said that Toronto and Vancouver are similar in that both real estate markets are “booming” but he said that Toronto does not face the same geography-related constraints in creating new housing.

As well, Tory said that some data has indicated that foreign investors are a bigger factor in the Vancouver market, where they were responsible for 5.4 per cent of condominium purchases in 2015. In Toronto, foreign buyers were behind 3.8 per cent of condo purchases in 2015, Tory said.

Similar data, however, is not available for single-family homes, where price gains have been more pronounced.

“Without that information we really can’t have an informed response as to whether measures similar to Vancouver’s are necessary so I will be asking the province to help us address this information gap so we can make more informed decisions about what is happening here and what we may do about it,” Tory said.

Roberton says 'jury is out' on effectiveness of tax

The foreign buyers tax in Vancouver was introduced by the British Columbia government and not the city, so any similar tax in Toronto would likely have to be brought into effect by the Province of Ontario.

Robertson was asked about the effectiveness of the tax by reporters at city hall on Thursday but said it is hard to say whether it is having the desired effect in Vancouver, let alone whether it is something that should be replicated in Toronto.

“We are watching the data across the board and it is too early to tell. The prices are still holding but the market has obviously slowed dramatically. There is also some growing concern about the impact on commercial property and whether the investment dollar may go to where there is no 15 per cent tax, making the commercial market too hot,” he said.

The housing summit being held in Toronto on Friday will be attended by Robertson, Tory, Edmonton mayor Don Iveson and representatives from Calgary, Montreal and Ottawa.

According to a news release, the leaders will discuss “the affordable and social housing crisis facing Canadian cities.”