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Councillor Mike Colle proposed a new speculation tax at Toronto City Council on Dec. 15.

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With the goal of making housing in Toronto more affordable, the thinking appears to be that a new levy (in addition to the already existing capital gains tax) to the sale of homes that are not principal residences would deter speculation and eliminate “home flippers” from the tightest, most competitive housing market on record.

According to Colle, “These people are just essentially blowing up the market in Toronto … There are other factors, but this is one factor that I want the provincial government to wake up and look at.”

Speculation in Toronto real estate has probably been underestimated for too long as a significant force contributing to the current housing crisis. It is now estimated that a full quarter of the buyer pool is made up of investment buyers. Such investors compete with end users and drive-up prices.

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Some figures now show that mortgages held by investors have doubled over the past year.

Just last month, the Bank of Canada raised the alarm that speculative activity was putting our country’s housing market at a higher risk of correction.

“A sudden influx of investors in the housing market likely contributed to the rapid price increases we saw earlier this year,” Bank of Canada’s deputy governor Paul Beaudry said in a speech to the Ontario Securities Commission. “That can expose the market to a higher chance of a correction.”

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“The damage can spread far beyond the investors,” Beaudry said. “…….

Source: https://torontosun.com/opinion/columnists/lackie-speculation-tax-wont-rein-in-toronto-housing-market