Photo: Anton Bielousov/Flickr
The Canadian Real Estate Association (CREA) has a warning for federal and provincial policymakers.
Efforts to curtail demand for real estate in the Toronto region may pose serious problems for other Canadian markets, suggests CREA Chief Economist Gregory Klump.
“Because housing market balance varies by location, federal or provincial policy measures aimed at cooling demand in Toronto risk destabilizing housing markets elsewhere,” says Klump in a statement.
Klump’s statement arrives just ahead of Ontario’s annual budget release on April 27 and an expected announcement from the province concerning a move to address eroding housing affordability in the region.
Toronto Mayor John Tory is meeting with Ontario Finance Minister Charles Sousa and Canadian Finance Minister Charles Sousa today to talk about a possible vacant-home tax for Toronto, as well as affordable rentals and better data collection, the mayor’s office tells BuzzBuzzNews.
However, unlike GTA and its environs in southern Ontario, the vast majority of local housing markets across Canada are not in need of cooling, the latest CREA data suggests.
Some, such as Calgary, are even seeing year-over-year price declines, creating a practical challenge for policymakers at the federal and provincial levels seeking to target one regional market without toppling others.
CREA’s March statistics provide a snapshot of the widening gap between the Toronto region and much of the rest of the country.
On average, Canadian homes sold for $548,517 in March, representing an increase of 8.2 per cent from a year earlier, according to CREA.
BMO Chief Economist Douglas Porter notes the strongest price gains were heavily concentrated in Ontario.
“Almost the entire province of Ontario’s housing market is now on fire, while most of the rest of the country wonders what all the fuss is about,” writes Porter responding to the CREA figures.
All but one of the eight cities to see home prices surge by at least 20 per cent annually in March were in Ontario, says Porter.
Windsor, London, Kitchener-Waterloo, St. Catharines and Thunder Bay were among the Ontario markets see annual gains of 20 per cent or more in March.
Strength like that spilling far outside the GTA suggests that supply or lack thereof in the area is not the only factor supporting high home prices, Porter suggests.
“There are lots of open spaces around London, for example,” he says.
Victoria was the only market outside of Ontario to see growth in the range of 20 per cent or more.
Porter has previously suggested BC’s foreign-buyer tax for Metro Vancouver has buoyed Victoria’s market due to its lack of a similar levy.
CREA President Andrew Peck noted the impact activity in the Toronto region is having on national figures as the number of homes changing hands across Canada in March increased 6.6 per cent over the same month last year.
“The current strength in national home sales mainly speaks to what’s going on in and around Toronto,” says Peck in a statement.
“Elsewhere, sales remain slow or well below previous highs,” he adds.