An industry player argued that the Ontario government needs to intervene promptly and decisively to address Toronto’s long-running home affordability issue, in the wake of the latest figures indicating that the average home sale price increased by 32.5 per cent year-over-year in February (up to $1.2 million).
In an interview with The Globe and Mail, Realosophy Realty Inc. president John Pasalis noted that activity in the Toronto housing market is unlikely to show signs of moderation in the near future, as multiple and equally important causes are driving the city’s price growth. He added that this menagerie of factors would require an assortment of reforms that the Ontario government should put in place as soon as the next budget rolls around.
“I think we need a big stick right now,” Pasalis said. “It’s not one of those things where there’s an easy fix.”
In particular, Pasalis is calling for a harsher stance on flipping via a steep speculation tax.
“This is generally what policies should discourage – they should discourage speculation in single-family homes. It’s not good, it messes up our entire market and it makes housing less affordable for buyers,” Pasalis stated.
“There are clearly elements of speculation in the market,” Bank of Nova Scotia chief economist Jean-François Perrault agreed. “There’s no doubt about it.”
Perrault noted that a tax on single-family homes flipped up to two years after purchase would cast a wider net on speculators, with the side benefit of using proceeds from such a tax to fund subsidized housing projects or assistance for first-time or low-income buyers.
Ontario Finance Minister Charles Sousa recently urged the federal government to restrain speculative investing in Canadian housing markets by increasing the taxable amount to above 50 per cent of real estate sale profits.
Speculation has been cited by multiple observers as one of the leading factors behind soaring home prices in Toronto and Vancouver, as well as their surrounding areas.