Ontario Vows to Cool Housing Market as April 27 Budget AwaitedBy
‘Looking at a number of alternatives’ to temper market: Sousa
‘Hot’ market making it tough to buy first homes, Sousa says
Ontario Finance Minister Charles Sousa is considering a number of measures to cool the housing market as he prepares to unveil his annual budget on April 27.
Sousa didn’t elaborate on specific steps in a speech at the Empire Club of Canada in Toronto on Thursday, and didn’t say if they’ll be in the budget. He will meet with Canada’s Finance Minister Bill Morneau and Toronto Mayor John Tory on Tuesday to discuss the housing market.
"It’s unfair that deep pockets are driving up the cost of homes," Sousa said in the speech. "All levels of government need to work together to find remedies," he added, calling for a "thoughtful approach to avoid unintended consequences."
While any misstep could be a drag on growth, there’s scope to cushion a slowdown for now: Ontario’s economy will grow 2.3 percent in 2017, according to a Bloomberg survey, beating other Canadian provinces for the first time since 2000. Policy makers have also committed to a long-standing plan to balance the budget in the fiscal year started April 1.
Prices in the province’s largest city soared 33 percent in March from a year earlier, the most in almost three decades, as the cost of a detached downtown home climbed to nearly C$1.6 million ($1.2 million). Bank of Canada Governor Stephen Poloz said Wednesday the gains in prices are unsustainable as they have “divorced” from typical metrics of demand such as income growth and demographics.
Options to cool the market could include taxing foreign buyers, boosting supply, rent control or imposing levies on empty homes, though a lack of solid data is a hurdle to Ontario choosing the right combination. Canada’s richest and most populous province is concerned about speculators and has asked Morneau to close a loophole on capital gains exemptions, Sousa said.
The province has benefited from an upturn in U.S. economic growth, cheaper crude oil and a weaker Canadian dollar in recent months, yet a slowdown in the global economy could affect its performance in the coming years.
In the latest update to its budget for the fiscal year ending March 31, Ontario -- the world’s most indebted sub-sovereign according to Moody’s Investors Service -- saw a C$1.9 billion deficit , down from C$4.3 billion projected initially.
"There are those who go into new developments, buy up a slew of properties, and then flip them, while avoiding to pay their fair share of taxes," Sousa said. "I call them property scalpers. And worse, they are crowding out families who are trying to put down roots."