A Toronto realtor says he sees a clear link between Vancouver’s tax on foreign buyers and the surge in sales in Toronto’s luxury real estate market.
Barry Cohen, a luxury realtor with Re/Max says the sale of homes worth more than $2 million soared in the third quarter of this year.
“Foreign investors were transitioning into the Greater Toronto Area within weeks of the tax introduction in Vancouver,” says Cohen, referring to a 15 per cent additional property tax transfer imposed by the British Columbia on overseas buyers purchasing in the west coast city’s urban limits. “The impact on the market has been significant.”
The Real Estate Board of Greater Vancouver has reported year-over-year sales declines in the 30 per cent range since the tax was implemented Aug. 2 (it was announced July 25). The Ontario government has said it is looking at the issue and some economists have called for a special tax in Toronto as well.
Cohen says there were 759 homes priced over $2 million that changed hands between July 1 and Sept. 30 in Toronto, an unexplained increase from the 394 sales during the same period a year earlier. He did not supply any data to indicate those additional buyers were actually from abroad.
Year-to-date 2,400 sales in Toronto have take place for more than $2 million, an increase from 1,312 a year earlier. Those sales only represent 2.6 per cent of the Toronto marketplace.
The federal government brought in new rules this week making it tougher to qualify for a mortgage and Ottawa has also tightened regulations regarding claiming a tax exemption on principal residences, something many believe was aimed at foreign buyers.
“It’s likely the first of many pre-emptive measures that will be put in place to reduce overall risk in the marketplace,” warns Cohen, who believes that Toronto is unlikely to follow Vancouver’s lead and says any new tax on foreign buyers would have “far-reaching implications” for the housing market.
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