Housing prices in Toronto went through the roof long before governments started toying with a tax on foreign dwelling buyers.
While attractive for politicians, whose first response to any problem is to tax it, this issue has been decades in the making, matching a chronic absence of housing supplying to ever-increasing demand, driving prices up.
The causes of high dwelling prices in Toronto are complex.
They include an excess of government bureaucracy, signifying the inordinate quantity of period and expense it takes to build brand-new housing.
Toronto has run out of undeveloped country to build on, starting brand-new housing projects generally involve demolishing older homes.
That elicits near-constant community opposition to brand-new residential project from people who already have homes in a neighbourhood, particularly to multi-unit residences such as townhouses and condominiums.
RBC Capital Markets last year recognized a number of major issues driving up dwelling prices in Toronto, with potential impacts of foreign home buyers down the list.
The top four is very low interest rates, higher incomes, people willing to spend a greater percentage of their income financing a mortgage than in the past, and more baby boomers gifting their children with the down payment on a mortgage, compared to previous generations.
Toronto, for all its troubles, remains an attractive home to live, as judged by the housing sell and the constant influx of new immigrants who are not “foreign home buyers”, but brand-new Canadians looking to buy homes once they get a fiscal foot hold in the city.
Simply slapping a tax on foreign home buyers, as the B.C. government has done, is not going to increase the supplying of brand-new homes, especially not of homes that are affordable to the average family.
The only long-term solution, considering the fact that their is no magic bullet, is to increase the overall housing supply, and to increase residential densities by superseding detached, single-family homes, with multi-unit residences.
The provincial government has been sending mixed signals on the issue of enforcing a tax on foreign home buyers ever since B.C. introduced one in 2016.
Initially, Finance Minister Charles Sousa mentioned Ontario would take a close look at the relevant recommendations, then Premier Kathleen Wynne appeared to throw cold water on the notion and now, Sousa replies a foreign home buyers tax is one alternative the province is looking at.
Queen’s Park would be better advised to reconsider its “greenbelt” preservation policies, which limit house building throughout the GTA, and remove political considerations from the financing of public transit programmes, so that they provide developing communities where people want to live.
Source: Toronto Sun
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