Less Foreign Buyers are Purchasing Homes in Ontario
The housing market remained hot all summer, and the provincial government’s attempts to cool it down resulted in quite a few new measures, one of which was a Non-Resident Speculation Tax (NRST). Foreign buyer activity was already low, but since the tax was introduced, new data has revealed that even less non-residents are buying homes.
Whether or not you agree with the NRST, new data based on provincial tax information shows that people who are not citizens or permanent residents of Canada, or even foreign corporations, accounted for 3.2 per cent of 66,434 home purchases across the Greater Golden Horseshoe (GGH) Region from between May 27, 2017 to August 18, 2017, down from 4.7 per cent from April 24, 2017 and May 26, 2017, when Ontario's Fair Housing Plan launched.
That’s a 1.5 per cent decrease overall in foreign home buying activity across the province. Now, that might not seem like much, but it’s one aspect that, according to the Wynne the government, had a cool-down effect - although minor - on the housing market.
The province said in a statement that the NRST is “helping to address unsustainable demand in the GGHwhile ensuring Ontario continues to be a place that welcomes all new residents.”
However, if foreign buyers’ activity was already low to begin with, just how much of an impact the NRSThad on the housing market remains up for debate and further study.
House flipping was also a major concern from the Wynne government in the spring, particularly when it came to foreign buyers. According to the Canadian Real Estate Association, Ontario home resales declined five per cent in July from the previous month while average prices rose 0.5 per cent.
“The measures that we introduced as a part of the Fair Housing Plan are working—we are seeing increased housing supply and evidence that more people are finding affordable homes,” said minister of finance Charles Sousa. “Ontario continues to be a place that welcomes all new residents, drawn by its rising employment and strong economy.”
Major real estate organizations like the Toronto Real Estate Board had asked the province to avoid acting hastily on the housing file. But there's no doubt that the Wynne government felt immense pressure to curb the province's growing affordable housing crisis.
The intense bidding wars and astronomically high prices were what prompted all levels of government to step in.
Now, though it seems like the market is levelling out, only time will tell what the fall will bring for housing across the province.
The 15 per cent tax on anyone who is not a citizen or permanent resident of Canada, or foreign corporations, is one of 16 measures on Ontario’s Fair Housing Plan.