As of February, the average price of a detached home in Toronto increased by 35 per cent year-over-year to around $1.5 million, further stoking fears that the market has now reached the point of no return prior to a crash.
Finance Minister Charles Sousa was noncommittal when asked if the city is now in a bubble.
“I don’t want to speculate. I certainly don’t want to create any more … intensity into the market – the uncertainty is evident,” Sousa stated, as quoted by the Toronto Star.
However, while Ontario is currently contemplating steps to moderate the situation, Sousa said that the provincial government is nearly at the limit of what it can do to address the city’s affordability problems.
“There are individuals that are going into subdivisions that are buying 10, 40, 50 homes – holding paper – and flipping it … and they’re crowding out families who are trying to buy.”
He added that federal intervention is sorely needed to counteract Toronto’s outsized housing market growth and activity.
“We can’t do that without the [Canada Revenue Agency],” he said.
Previously, Sousa requested federal Finance Minister Bill Morneau to include budget provisions that would increase the capital gains inclusion rate for non-principal residences. At present, only 50 per cent of these capital gains count as taxable income.
“Those were some of the requests that were made in terms of what degree of capital gains can we not exempt,” Sousa said.
The federal budget did not include the proposed changes. Sousa is expected to present his own budget on either April 13 or April 27.
“No one decision is effective – there [are] unintended consequences from anything that we do,” he said. “I don’t want to be doing anything that may be harming others.”