Politics & Real Estate: What’s next?

Sunday, April 15, 2018 Written by Emmanuelle in News

Housing policy, both rental and ownership, has dominated headlines in the Greater Golden Horseshoe (GGH) over the last two years. Access to housing, in one form or another, is top-of-mind for the great majority of residents. As we move toward the June 7 provincial election, each party should make very clear exactly what they will do to ensure sustained affordability in all segments of the housing market over the long term.

According to recent research conducted by Altus Group for TREB, 

  • Each home sale reported through TREB’s MLS® System results in over $68,000 in spin-off expenditure.            
  • Based on average home sales between 2014 and 2016, the average annual economic impacts of residential transactions reported through TREB’s MLS® System are as follows :  
  1. Approximately $7.0 billion in spin-off expenditures;   
  2.  Support for more than 142,00 jobs; and                
  3.  A combined $2.9 billion in local, provincial and federal government revenues.

Economic impact of this magnitude underpin what the potential effects and unintended consequences of government housing policy, including potential job losses and stress on public sector budgets. I wish that a vigorous housing policy debate between all three major provincial parties will take place as we move toward the June 7 provincial election. Let us now talk about:

  • the tax on foreign buyers,
  • rent control and
  •  increases to the provincial and municipal land transfer taxes,

Recent research and past experiences have shown that demand-focused measures do not lead to long term affordability in the housing market. In fact, we need a sustained market balance with a diversity of ownership and rental supply in the marketplace. Consumers also need relief from high taxation such as provincial and municipal land transfer taxes which is affecting affordability and discouraging mobility. However psychological impacts of such measures tend to be temporary. Many buyers who are temporarily on the sidelines will reinvigorate their property search in the near future. Also, in many segments of the housing market, the supply of listings remains in short supply from a historic perspective. To conclude, if demand increases relative to supply, market conditions will tighten and price growth will once again accelerate.

March 14, 2018 GLOBE NEWSWIRE and TREB