- Home-buying subsidy eaten up
- Wind Mobile to rebrand
Ontario home-buying subsidy math
Here's an interesting exercise in Ontario housing subsidy math, courtesy of Bank of Montreal chief economist Douglas Porter:
The average price of a home in Ontario has climbed by more than $88,000 over the course of a year.
That means the cost is rising by $2,000 every eight to nine days.
Ontario Finance Minister Charles Sousa has just unveiled measures to help young couples cope with surging home prices, doubling the land transfer tax refund to $4,000 from $2,000 for first-time buyers.
“The new subsidy will be gobbled up by underlying home price inflation in little more than a week,” BMO's Mr. Porter said. “We wouldn’t want to call this type of measure futile, but it seems to be roughly the equivalent of trying to stop a charging elephant with a pop gun.”
Mr. Porter's comments were part of a broader look at how policy makers are reacting to the renewed strength in Canadian housing markets, having moved forcefully earlier to tame prices in the Vancouver and Toronto areas.
British Columbia earlier slapped a 15-per-cent tax on foreign buyers of Vancouver area homes, while the federal government brought in new mortgage and tax measures.
Of late, the Vancouver market has cooled markedly, though those of Toronto and, indeed, southwestern Ontario, have continued to surge. Certain other markets are also faring well.
“The policy response to this extreme strength has been a tad bewildering, to be frank,” Mr. Porter said.
“Since the tightening steps taken first by B.C. and then by Ottawa, it appears that the tide is rushing out again.”
As evidence, he cited a Bank of Canada “that has effectively washed its hands of the powerful price gains” and a federal Finance Minister, Bill Morneau, who “seemingly encouraged more foreign buying” when he said the country would welcome foreigners who want to buy second homes here.
Mr. Porter also cited the Ontario land transfer tax subsidy, small though it is, as “potentially further fuelling an already piping hot market.”
While Canada's housing market has perked up again, economists still believe the various policy measures, coupled with higher mortgage rates, will cool things down next year.
(And, yes, they'll be the first to tell you they have oft said this before.)
“In addition to tighter mortgage regulation, interest rates appear to be edging higher,” said Toronto-Dominion Bank economist Diana Petramala.
She noted that the five-year Government of Canada bond yield, to which mortgage rates are linked, has increased by 30 basis points since Donald Trump won the U.S. presidency and almost 40 basis points since its 2016 lows.
“Both alternative lenders and chartered banks have already started to pass higher rates onto consumers, with the best available five-year mortgage rate up by 10 basis points [last] week,” Ms. Petramala said.
“While most markets remain balanced and are likely well positioned to absorb marginally higher interest rates, risks have substantially shifted from Vancouver to Toronto in recent months where home prices rose 21 per cent year-over-year in October – the highest pace of growth since the late 1980s.”
Wind to rebrand
Wind Mobile is changing its name to Freedom Mobile and will soon be turning on its new, faster network in Toronto and Vancouver, The Globe and Mail’s Christine Dobby reports.
These are the first major strategic moves the wireless business has made publicly since Shaw Communications Inc. closed its $1.6-billion deal for the company on March 1.
Shaw management previously said the company is investing about $250-million on a network-wide upgrade to LTE and said it planned to complete the LTE rollout by the end of Shaw’s fiscal 2017 year, which is the end of August.