Toronto’s hot housing market driven more by speculators than homebuyers: Poloz

“While there’s no fundamental story that we could tell to justify that kind of inflation rate in housing prices, it’s that gap between what fundamentals could manage to explain and what is actually happening, which suggests that there’s a growing role for speculation in that,” Poloz said in Ottawa.

“In other words, demand is being driven more by speculative demand or investor demand as opposed to just folks that are buying a house.”

Wynne was set to discuss the housing situation with Toronto-area mayors later on Wednesday.

The province’s finance minister, Charles Sousa, has floated a number of possible measures, including implementing a tax on foreign buyers, speculators or vacant homes.

He said Wednesday that while market forces will do what is necessary to keep up with demand, he is looking at ways to speed up more supply becoming available.

“People are frustrated,” Sousa said. “Families are pissed that they can’t win bidding wars. And, in times past, young families will get into the market with those entry market homes. They’re hard to come by. So we’re going to figure out a way to help do that too.”

The current rate of price increase is likely unsustainable, Poloz cautioned.

“I think it’s time we remind folks that prices of houses can go down as well as up,” he said.

Speculation is something Ontario is trying to address, Sousa said.

“When I’m thinking of speculators, I’m always thinking of those that are acting as scalpers, where they’re holding assignments on papers and after the construction is complete, they sell for high profits without paying their fair share of income tax, because they take advantage of an exemption on capital gains,” he said.

Sousa had asked federal Finance Minister Bill Morneau for changes to the taxation of capital gains on the sale of homes that are not classified as a primary residence, as a way to address speculative investors flipping homes.

The premier said that while there is no one measure that will change market dynamics, she wants the government’s initiatives to “calm” the process.

“My hope would be that we can make the process of finding a place to live a bit more rational, a bit more predictable, a bit less frantic for people,” Wynne said Wednesday.

Allison Jones, The Canadian Press

Note to readers: This is a corrected story. An earlier version had an incorrect first name for Premier Kathleen Wynne.

by Canadian Press

Toronto’s hot housing market driven more by speculators than homebuyers: Poloz

Our Community