Canada: Three levels of government trying to rein in the soaring Toronto housing market

While signaling to unveil the new housing plan before the provincial budget on April 27, Charles Sousa claimed, "A strong housing market reflects Ontario's strong economy. Canadians are moving to Ontario at the fastest rate in 29 years, and the Greater Golden Horseshoe (GGH) continues to be one of the most attractive places in the country for newcomers”.

Minister Sousa considered the hike in property prices as good news but the government has become increasingly concerned about rapidly rising rents and housing prices, and their impact on people looking to find a home.

Sousa said that his meeting with Bill Morneau, Federal Minister of Finance, and John Tory, Mayor of Toronto, was to discuss new ways to collaborate to address rising housing and rent costs, and share information across jurisdictions.

He considered the meeting as productive and included discussions about how speculative activities may be driving up housing costs, and resulting in homes being left vacant, constraining supply.

Meanwhile, Sousa’s office refused to comment if the government would introduce rules similar to those imposed in British Columbia but hinted a number of possible measures, including implementing a tax on foreign buyers, vacant homes and speculators.

Sousa suggested, during the meeting, that they meet quarterly to discuss how this grave issue of housing market prices can be addressed and what measures were being taken by the government in its meetings with Greater Golden Horseshoe (GGH) and the impact of market speculation on GGH.

Sousa said there was a greater need to share data between governments to get proper analysis to get to housing market stability.

He was optimistic about Canada Revenue Agency’s promise to support enforcement of tax compliance within the GGH's real estate sector.

Federal Finance Minister Bill Morneau said all three have agreed that in the short term, none of the levels of government will bring in new measure for homebuyers that would boost demand.

“We’re concerned that price increases, in the Greater Toronto Area (GTA), are putting the dream of owning a home out of reach of middle-class families,” he said. “At the same time, we know that those who own their homes are concerned that they maintain the value of those homes.”

Morneau also suggested that Ottawa would share the data it is gathering on housing markets with the other two levels of government.

He reiterated that the Canada Revenue Agency will put resources toward ensuring tax compliance but refused to accept  his Ontario counterpart’s  request  to change the taxation of capital gains on the sale of homes that are not classified as a primary residence.

“Everything we wanted to say about capital gains taxes was in our last budget and you probably saw what was in our last budget,” said minister Morneau.

According to Toronto mayor, John Tory, there is a growing divide between those who can afford to live and work in the city and those who cannot.

He said he has committed to streamlining and speeding up building approvals, in particular for new affordable rental housing and is also looking at a vacant homes tax.

Mayor Tory also said housing affordability affects every one -- forcing the lower income people based outside the city to commute every day to work; middle income earners are struggling to afford rent and young couples looking to start a family are finding it beyond their means to afford their first home in the city.

Ontario Premier Kathleen Wynne made an announcement in Toronto with Sousa and Housing Minister Chris Ballard and stated that Ontario’s highly anticipated package of housing measures would be announced Thursday.

(Reporting by Suman Das)

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