Three levels of government facing a red-hot housing market in the Greater Toronto Area have agreed Tuesday not to introduce any measures that would further boost demand and drive prices even higher.
The federal and Ontario finance ministers and the mayor of Toronto met in the city to discuss how to tackle the housing market in the region, where the average price of detached houses rose to $1.21 million last month, up 33.4 per cent from a year ago.
Ontario Finance Minister Charles Sousa signalled that he will unveil his housing plan before the provincial budget, set to be delivered on April 27.
“In the coming week, the Ontario government will announce a suite of measures designed to increase supply and address demand,” he said. “We’ve developed a comprehensive action plan to help stabilize the housing market.”
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Federal Finance Minister Bill Morneau said the three agreed that in the short term, none of the levels of government will bring in new measures for homebuyers that would boost demand.
“We’re concerned that the price increases, in particular in the 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 offered to share the data Ottawa is gathering on housing markets with the other two levels of government. He also said the Canada Revenue Agency will put resources toward ensuring tax compliance, but shut down a previous request from his Ontario counterpart 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 Morneau, who did not include the requested changes in his budget last month.
Late last year, Ontario announced it would double the rebate on its land transfer tax for first-time homebuyers to $4,000 in an effort to help them enter the housing market. Under the new rules, which took effect on Jan. 1, first-time homebuyers don’t pay any land transfer tax on the first $368,000 of a purchase price.
Morneau’s latest comments suggest it’s unlikely first-time homebuyers will see any incentives in the near future.
Toronto Mayor John Tory said there is a growing divide between those who can afford to live and work in the city and those who can’t.
“The issue we’re facing on housing affordability affects almost everyone — those with lower incomes being priced out of the city and forced to commute hours every day to work, middle income earners struggling to afford rent and young couples looking to start a family and looking to acquire their first home and feeling an increasing sense of impossibility,” he said.
Tory said he has committed to streamlining and speeding up building approvals, in particular for new affordable rental housing and he is also looking at a vacant homes tax.
Sousa has spoken frequently in recent weeks about going after speculators, those who buy a home in the hope of turning a profit rather than to live in. The governor of the Bank of Canada has also said that the rate of increase in house prices in the GTA suggests the demand is being driven more by speculators than “just folks that are buying a house.”
A spokeswoman for Premier Kathleen Wynne said Tuesday a tax on non-resident speculators is one of the measures being considered. Sousa declined to clarify what that could look like.