Is the Foreign Buyers Tax coming to Toronto?

This summer, the government of British Columbia introduced a 15% tax on properties purchased by Non-Residents in Vancouver. The goal of the tax is to reduce the impact that foreign buyers have on the affordability of homes in the Greater Vancouver Area.  Vancouver is the least affordable place in Canada to buy, and is becoming out of reach of the average family. 

The effect of the Foreign Buyer's tax in Vancouver has been a significant drop in home sales. The Real Estate Board of Greater Vancouver says sales fell 26 per cent compared to August 2015 and 22.8 per cent compared to July.  

In Toronto, we keep on rolling ahead.  The $1.2 million average cost of a Toronto detached home was 18.3 per cent higher this year compared to last. But a detached home outside Toronto with an average cost last month of $905,610, was 23.3 per cent more than August 2015.

The tax seems to be having the desired effect, with a sharp decrease in Vancouver home sales.  The foreign buyer's tax is currently under review as an option to cool Toronto's red-hot market.  Toronto is a distant second in affordability, but with an influx of foreign investment (or the illusion of increased foreign investment) Toronto could be up for a spike in prices, which would put the dream of homeownership to bed for many Torontonians.  

On the flip side, Toronto appears to have more supply, room to grow and a steady job market that could better cushion an increase in foreign investment, which is currently ~1% of all home purchases.

The answer in Toronto may not be a tax on foreign buyers, but if home values in Toronto continue to rise by double-figures, while the rest of the country either decreases or slows, we will be in line for a Toronto-specific intervention.  

If you're interested in reading more on the subject, here's a great article from the Toronto Star about it:

Toronto Real Estate as Hot as the Weather