Foreign home buyers appear to be looking eastward as sales in the Greater Toronto Area (GTA) continue to rise, and sales in Vancouver continue to fall.
The number of sales of detached properties, condos, townhouses and other residential housing types grew by 21.5 percent in the GTA in September compared with the same month last year. In contrast, Greater Vancouver sales decreased by 32.6 percent.
Toronto-Dominion Bank economist Diana Petramala in an interview on Wednesday said, "If you’re foreign buyer who is looking for where to park your money, there is a significant difference in home prices between Vancouver and Toronto... In a Toronto market that is already tight, when you add even a just little bit of foreign investment, that marginal buyer can have big impacts on home prices and sales.”
Earlier this week, Federal Finance Minister Bill Morneau announced a move to close tax loopholes used by some foreign-buyers, whilst also introducing a more stringent mortgage stress test. Despite these measures, Ms. Petramala predicts that the Toronto region will continue to be a hot market for both domestic and international buyers, due to low interest rates. "Toronto is booming with people", she said.
According to data from the Toronto Real Estate Board, the average price of detached properties sold in the GTA in September increased by 23.6 percent over the past year, reaching a record price of $1.01 million. This marked the first time that the monthly average price for detached houses in the region have surpassed the million-dollar mark.
In contrast, average prices for detached homes sold in Greater Vancouver were $1.53 million, an increase of 8.8 percent compared to the same month last year, but a drop of 16.1 percent from its peak in January 2016.
Toronto Mayor John Tory said that before implementing any tax such as that imposed on foreign home buyers in Vancouver, more information about Toronto's "very different" market is needed.
"So I think if we increase the supply of affordable housing, especially rental but also some ownership options, that’s the best thing I can do with my time and my efforts and our limited resources here," said Tory, acknowledging that many Torontonians are finding it difficult to afford a home.
Do you think that foreign investment is the sole reason that Toronto's housing prices are rapidly increasing? Or other factors such as the regions rapidly expanding population.