Skip to main content

The Globe and Mail

Globe editorial: Does Toronto need a tax on foreign home-buyers?

Ontario Finance Minister Charles Sousa may be on the verge of joining a trend, and he would probably be right to do so. Like a host of economists and regulators, he's worried about the symptoms of an overheated housing market in the Greater Toronto Area. He should be.

So Mr. Sousa is letting it be known that the province's Liberal government may follow the example of British Columbia, which imposed a levy on foreign home-buyers, in an attempt to cool the excitement of speculators. In February, detached-home prices in the GTA rose by fully 30 per cent compared with the previous year.

Initially, the B.C. government resisted the idea of a levy. Michael de Jong, the B.C. Finance Minister, was reluctant to risk provoking a reduction of the value of homeowners' equity. But last summer, as housing prices continued to rise, Mr. de Jong changed his mind. After B.C.'s 15-per-cent foreign-buyer levy was established, the housing market there appears to have begun to ease.

Story continues below advertisement

The foreign-buyers tax applies to non-resident non-citizens, not immigrants to Canada. And if and when the overheating in the real estate market recedes, the measures can be reduced or removed. It's uncertain exactly what effect a tax could have on the housing market in Ontario, but evidence strongly suggests it couldn't hurt.

Last week, the Bank of International Settlements said Canadian housing has been showing signs of "early warning indicators" and "vulnerabilities," unusually so in developed countries.

The BIS says Canada has one of the highest credit-to-GDP ratios among developed nations – a pattern more common with countries like China.

So far, B.C.'s foreign homebuyers tax seems to be having a modestly positive impact. Mr. Sousa is right to be considering the same policy for Ontario.

Report an error Licensing Options
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.