Ontario government urges feds to help curb real estate speculation
Queen’s Park wants Ottawa to help cool home prices in Toronto’s overheated real estate market.
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Queen’s Park wants Ottawa to help cool home prices in overheated real estate markets such as Toronto.
Ontario Finance Minister Charles Sousa is urging federal Finance Minister Bill Morneau to take steps in his budget Wednesday to curb house speculation contributing to the soaring cost of homes.
“Uncertainty in the housing market has been partially driven by speculation,” Sousa told the House on Monday after sending an open letter to Morneau imploring him to act.
“I’ve sent a letter to the federal minister of finance to request that the federal government consider increasing the capital-gains inclusion rate for non-principal residences,” the provincial treasurer said.
“Under the current rule, when you sell a home that is not your principal residence for a profit, only 50 per cent of the capital gain is included in taxable income,” he said.
“This change will be an important step toward keeping our country’s housing market stable and curbing price acceleration.”
Sousa’s comments come as he is preparing an Ontario budget expected next month.
He was coy about what additional measures the provincial government will take to ensure house prices are more affordable.
“We are looking at a suite of options that may be available to us,” said Sousa, noting he met with British Columbia Finance Minister Mike de Jong on Monday to discuss that province’s tax on foreign buyers in Vancouver.
But the Ontario minister stressed he was concerned about “the unintended consequences of any decisions we make,” and indicated that domestic speculators are having a greater impact on housing prices than wealthy investors from abroad.
“Just today, TD Economics released a special report on the housing market, arguing that the heightened uncertainty in the market can be largely attributed to speculation,” he said.
The bank noted prices are expected to rise between 20 per cent and 25 per cent this year, and “at roughly three per cent to five per cent in 2018.”
“Uncertainty is running higher than usual due to the risk of more buyer speculative activity,” the TD study said.
“Our analysis suggests speculative demand forces may have become more far-reaching within Toronto’s housing market.”