Vancouver’s foreign buyers tax has spurred Toronto sales, according to condo specialist
The recent move to slow down Vancouver’s housing market by imposing a new 15 per cent foreign buyers tax has further spurred Toronto condominium sales, according to Franco Dinatale, Toronto condo specialist for Right at Home Realty Brokerage Inc. and the Toronto Condo Team.
Vancouver single-family home sales have tumbled since plans to tax foreign buyers in the province of British Columbia were announced recently, a sign the government’s bid to slow the market has caused an immediate chill in real estate sales in Vancouver. In fact, some buyers walked away from their Vancouver purchases mid-transaction to avoid paying the tax. Others pushed up closings if they could to wrap up deals before the new tax kicked in.
Potential offshore investors in Vancouver real estate are now looking east to Toronto as a better value location for investment real estate, even though Toronto already has its red hot prices and a shortage of inventory.
The Toronto Real Estate Board reported a record number of home sales in July, even as total available listings plunged nearly 32 per cent. “There are two main factors powering condo price growth in the Toronto,” says Dinatale “Inventory supply shortages and potential buyers’ time is running out before a similar strategy of a foreign buyers tax comes to Toronto as well. Condo investors see it as a window of opportunity, and there is a real urgency to close a deal.”
“We feel the main problem is that, for many years, the Province of Ontario has cut back on new serviced development land available to developers which have created a snowball effect on inventory shortage. The process to develop property in the GTA is very slow compared to a decade ago. The process is fraught with red tape and political barriers. With 50,000 new residents coming into Toronto each year looking for housing, combined with foreign investors who believe Toronto is still a bargain when compared to other major international cities, it’s no wonder that prices have skyrocketed. The icing on the cake for foreign investors is that they feel safe in Toronto, in sharp contrast to many other parts of the world, including Europe, where they have had their fair share of economic, social and political problems. Toronto looks like a calm harbour in a storm to many real estate investors,” explains Dinatale.
“Some say Toronto is in a real estate bubble that is about to burst, but that is hard to reconcile with the continuing general shortage of inventory and increased immigration to Canada. If the market eventually corrects, it’s likely to be a soft landing due to so many new Canadians and foreign investors looking for homes in the GTA,” says Dinatale.