The Ontario government needs to focus on the supply side of housing to tackle affordability issues in the Greater Toronto Area while steering clear of taxing foreign buyers, says Tim Hudak, the Ontario Real Estate Association's incoming chief executive officer.
"The province has artificially and dramatically limited land supply, particularly in the GTA and in the Niagara peninsula," the former Ontario Progressive Conservative leader argued in an interview. "Maybe individually, restricting land supply would hit a balance between environmental protection and economic growth. But the accumulation has meant a severe and arbitrary restriction of land for new housing."
Mr. Hudak wants to draw attention to the supply side because members of the trade association are concerned that Ontario's Liberal government may follow the lead of British Columbia, which implemented a 15-per-cent tax on home purchases by foreign buyers in the Vancouver region, effective Aug. 2.
"Taxation is a blunt instrument. It's good politics to point to the foreigner. There is political opportunism," Mr. Hudak said. "But the best way to address high housing prices would be freeing up more land and allowing housing developments to move forward with less red tape."
He urged Ontario's Liberal government to reassess its plans for expanding the Greenbelt – protected land on the fringes of the GTA. It would be prudent for the province to explore ways to ease limits on developable land, he said.
"As anybody who has taken Economics 101 knows, if you restrict supply and demand increases, prices are going to go through the roof, and that is happening," Mr. Hudak said. "There are short-term decisions being made without paying attention to the long-term impact on the affordability of home ownership. Home ownership changes who we are as individuals. It's where you raise your family. You put a lot of time and sweat equity into your home, and you hope to sell it down the road to retire and get some equity out of it."
Housing sales of all types in the Vancouver area fell 32.6 per cent in September compared with the same month last year as the market adjusts to the B.C. government's tax on foreign purchasers. By contrast, sales in the GTA rose 21.5 per cent.
Mr. Hudak resigned as the MPP for Niagara West-Glanbrook effective last month and recently joined the trade association, which represents real estate agents and boards in Ontario. He will succeed the retiring Ed Barisa as the real estate association's CEO on Dec. 2.
"I have to move full time to Toronto, get a house, a car – all that kind of stuff," Mr. Hudak said.
"What attracted to me to the CEO position at the association was its mission. And that's making sure that home ownership is affordable. Increasingly in the GTA, it has become out of reach, particularly for young families or recent graduates who want to get out of mom and dad's basement."
Ontario's Liberal government, however, has indicated that one option not on the table is taking away land from the Greenbelt to allow for more suburban sprawl.
Asked about lobbying from the real estate association that the province open the Greenbelt up to development, Ontario Finance Minister Charles Sousa poured cold water on the idea.
Mr. Sousa said the province is more interested in seeing infill and higher-density development. Citing a Neptis Foundation report, he said there is already "an ample supply of land available for development" and there is no need to take some out of the Greenbelt.
"In terms of actual land supply, it exists. In terms of protecting the Greenbelt – that will continue," he said. Opening up the Greenbelt to development would run counter to the province's policy of trying to curb suburban sprawl around Toronto.
This past spring, the Ontario government announced new draft planning rules that would expand the size of the Greenbelt and oblige cities and towns to build denser housing. The government spent the summer consulting on the rules and is expected to make a final decision in the coming weeks.
Average price for detached houses sold in September:
Greater Vancouver: $1.53-million
Greater Toronto: $1.01-million
Average price for condos sold in September:
Greater Vancouver: $549,214
Greater Toronto: $422,002
Sources: Data on multiple listing service from Real Estate Board of Greater Vancouver and Toronto Real Estate Board.