Ukrainian Credit Union Limited.
The following could sound as a consolation to those who still hope to buy any kind of real estate in Toronto. After a 15% tax was imposed on foreign buyers of real estate in August 2016, sales of detached houses in Vancouver went down by 54% from a year earlier, while sales of attached units are down 40%. No wonder the Toronto Real Estate Board has just strongly urged against the imposition of a similar tax in Toronto which is currently under consideration. The Toronto R.E. Board is arguing that only about 5% of GTA transactions, in which the Board’s members represented buyers, involved a foreign purchaser, based on the TREB-commissioned Ipsos survey. Based on the actual numbers from Vancouver, this share could be much higher (in Vancouver it probably reached 70%).
But those who oppose this tax may be right in that it won’t make Toronto real estate affordable anyway, as Vancouver real estate remains expensive: in February, houses in that city were 14% more expensive than a year earlier. This number could hardly console Vancouver home buyers, if only compared to the price growth in Toronto, which was almost 24% up from February 2016.
Two major factors will likely be affecting the real estate markets in Vancouver and Toronto going forward. First, persistently low interest rates, which the Bank of Canada left only two weeks ago, as Canadian economic growth remains uncertain. Second, the continuing influx of rich foreigners as Canada attracted an estimated 8,000 millionaires last year. This compares to 10,000 millionaires who came to the U.S., while that country’s population is almost ten times as large.
How and when possible economic troubles in Asia and likely interest rate hikes in Canada will affect Canadian real estate markets remains the million dollar question.