Ontario Premier Kathleen Wynne is worried about Toronto's skyrocketing housing prices – but says her government needs more information about what is driving the problem before deciding whether to bring in a foreign-buyer tax similar to British Columbia's.
"I'm concerned about this," Ms. Wynne told reporters at Queen's Park on Friday. "I want to know what the analysis is of the difference between the Ontario market and the British Columbia market – they're not exactly the same – and I want to know what the impact has been, exactly, of what has been done in B.C. and what the potential impact would be in Ontario."
There is no firm timeline for Ontario to decide whether to take action on housing prices, a government source said, but the province is hoping to have a better idea before the end of the year. The province is part of a task force, along with the federal government and B.C., studying housing prices in the Toronto and Vancouver areas.
The Premier's comments come days after new B.C. government data showed purchases of homes in Metro Vancouver by foreign buyers dropped substantially in August, the first full month since the new 15-per-cent tax came into effect. Less than 1 per cent of housing transactions in Metro Vancouver last month involved a foreign buyer, compared with more than 13 per cent in the seven weeks before.
In Toronto, meanwhile, average resale house prices have risen nearly 18 per cent in the last year, according to the Toronto Real Estate Board, to $1.2-million for a detached house, $774,700 for a semi-detached and $446,600 for a condominium.
But the Ontario government is not entirely certain what is driving the rise in prices, and whether foreign real estate speculation is a significant enough part of the problem to be worth addressing. There are also concerns that government action could hurt the equity current homeowners have built up.
"The last thing we want to do is something that will have an unintended consequence," Ms. Wynne said. "I want to make sure that we move ahead with a solution – if there's a possibility of a solution, or a partial solution, here in Ontario – that is tailored for Ontario's market and is not going to undercut or undermine the real estate market for people in the province."
Ms. Wynne said her government is still trying to "define those problems for the Ontario market." The government source said the data on what is driving real estate prices are complicated, which is why the province is taking a careful look at it before deciding what to do.
"There are many voices on both sides of this issue at this point. And so I want to take advice under consideration," she said.
The Ontario government has been under pressure from the real estate industry not to follow B.C.'s example. In letters last month to Finance Minister Charles Sousa and Toronto Mayor John Tory, the Toronto Real Estate Board and the Ontario Real Estate Association said discouraging foreign property speculators from buying in Toronto would hurt the economy.
Meanwhile, some politicians, including former federal finance minister Joe Oliver and Toronto Councillor Jim Karygiannis have suggested a B.C.-style tax in the Toronto area would be a good idea.
Mr. Sousa, who sits on the joint housing price committee with federal counterpart Bill Morneau and B.C.'s Mike de Jong, has previously said he would watch the effect of the B.C. tax to see whether it could be useful in Ontario. But he has cautioned that bringing in such a levy in the Toronto area could cause an increase in housing prices in other cities in the province.