That’s the finding of a report from CIBC which notes that high demand, low supply and rising land prices continue to fuel the GTA housing market.
"The GTA housing market is fast approaching a full-blown affordability crisis," says Benjamin Tal, Deputy Chief Economist, CIBC, who authored the report, GTA Housing – Rent Must be Part of the Solution. "Ottawa's ability to help here is limited since national policies are too blunt to deal effectively with the GTA market. What is needed are GTA-specific policies."
Due to the restriction on land usage, Tal says that the GTA market is not a normal-functioning one and requires bespoke policies. The foreign buyer tax proposal is not the ultimate solution he says.
"A much more effective and long-lasting solution would be to dramatically change the role of rental activity in the city's housing mix," he says. "Simply put, the propensity to rent in the GTA must rise, and the market should realign to increase the supply of rental units. Crucial here is the role of purpose-built apartment supply. With some incentives from municipalities, purpose-built rentals could be the difference between an affordable and an unaffordable GTA housing market."
More market update:
Rising costs of renting in the Greater Toronto Area will require specific policies aimed at increasing supply of purpose-built rental units.