Vancouver's new tax on foreign homebuyers has some clients setting their sights to the east, to Toronto.
The tax, which was passed in late July by the B.C. Liberals, forces foreign nationals to fork over an additional 15 per cent of the home's value in property transfer taxes. The government said the bill was meant to help quell the competition local buyers face when trying to purchase a home in the area.
Recently released data showed that foreign buyers make up about 10 per cent of property sales in Metro Vancouver.
The tax adds up. With the average Vancouver-area residence costing $663,411 last month, buyers from outside Canada would face a transfer tax of $99,512.
So some buyers moving to Canada are eyeing properties in the country's largest city, where they can save a bit of cash while still living in a metropolitan area.
A spokesperson for the Ontario finance minister told CTV Toronto that the province is closely monitoring the markets in Vancouver and Toronto for signs of the tax's effect. Ontario politicians asked about imposing a similar tax said they aren't ruling anything out, making those in the industry nervous.
Officials at the Royal Bank of Canada are also monitoring the situation closely. RBC CEO David McKay said the short supply of single-family homes in both cities, combined with a strong demand in part due to immigration, means both cities need to be prepared to react quickly.
The bank was asked Wednesday about the possibility of a market crash in both cities, but Edward Jones analyst Jim Shanahan told The Canadian Press there is no data to suggest a correction is coming.
The Toronto Real Estate Board said it doesn't have enough data yet to determine how the tax will affect Toronto, but one developer said he's already seen an increase in foreign investment.
Jordan Teperman, executive vice-president of Haven Developments, said he expects Vancouver's tax to increase property value in Toronto. He said he's been getting calls from investors who were looking west, but decided against buying Vancouver real estate because of the tax.
One of his development projects is 85 per cent sold out, after just four months on the market. He said 60 per cent of the buyers are from out of province, either from elsewhere in Canada, from the U.S. or overseas.
"The tax is going to be better for Toronto's housing market as the market from the west comes over and creates further demand," he said.
With files from CTV Toronto's Paul Bliss and The Canadian Press
