The Ontario government is considering a new tax on foreign home buyers designed to curb rapid growth in Toronto home prices.
Finance Minister Charles Sousa said on Thursday he is reconsidering the tax as one option to cool the housing market, after rejecting such a measure last fall.
Mr. Sousa said he was previously inclined to “let market forces prevail,” but is now concerned with “the degree of fast appreciation in the short term and what will that do over the long term.”
With February data showing detached home prices in the GTA having risen by more than 30 per cent over the last year, a growing number of economists have recently warned that the overheated market risks accelerating beyond the control of policy makers.
Warren Lovely, head of public sector research and strategy at National Bank Financial, said he has also come around to the idea of a B.C.-style foreign-buyer tax, after having advised against it in discussions with Mr. Sousa last fall.
Runaway Toronto prices combined with the effectiveness of efforts to cool the Vancouver market require a rethink, Mr. Lovely said in a research note on Thursday.
“We’re not saying that an incremental property transfer tax levied on foreign buyers is the silver bullet,” Mr. Lovely said. “But its time may have come.”