What should we expect with the Liberal governments housing plan?

The provincial government has announced a 16 point plan intended to improve housing affordability, including a Non-Resident Speculations Tax, and a commitment to review the Real Estate and Business Brokers Act, 2002.

So what should we expect the impact will be on our current hot housing market?

I don’t see much of anything changing with regards to the announced changes in the short term.

The housing market ebbs and flows and without a doubt, we currently have a major supply issue. This is clearly evident with the many buyers having to look out far across the GTA for affordability reasons. Nothing in the Liberal’s fair housing plan truly addresses supply.

So let’s talk demand. 15% foreign investor tax. Sounds sexy…and protectionist at its core, but in reality will have little affect other than raise more income for a fiscally inept group of misfits.

Are foreign buyers in the GTA a problem or not? The government itself at various times, has said no it’s not, it’s a very small issue. Maybe 5% of sales are related due to foreign buyers? To wash your money from an unstable and corrupt environment to one where stability (in comparison) is greater, even the mafia would be happy to pay 15 points for this wonderful opportunity. Zero long term affect.

Rent control laws being adjusted. Almost every housing related economist in the world agrees that this will have the reverse intended affect. Rental units will tighten, existing low rent buildings will fall into disrepair (maybe even rival city owned and managed properties?) It will become harder to lock down a good rental apartment and Airbnb’s will become even more prevalent (a real contributor already to rental shortages).

I would venture to say that just the sheer amount of conversation from our three levels of government, Bank of Canada, the media (although we need to come up with a new term for this group as they mostly seem to be self interest slanted), will have a greater affect on sales slowing.

The real estate industry in Ontario accounts for 20% of its GDP. All levels of government benefit financially to a large degree. It’s no coincidence that they led with their first point being the 15% F.B.T.

Demand will soften in time as frustrated buyers remove themselves from looking. Additional sellers will come onto the market hoping to cash in on the crazy high prices some are fetching, allowing the remaining buyers opportunity to purchase.

I just don’t see much else happening in the short term, which is unfortunate in some ways. You want to feel that people who have grown up in our city, have a realistic chance of owning property in it. But this is not the Canadian way. We don’t grant land rights to its citizens.

People make choices on how to live their lives and real estate markets ebb and flow.


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