Skip to main content
Open this photo in gallery:

The Toronto Regional Real Estate Board says the average home price – including condos, semi-detached and detached homes – in the Greater Toronto Area was up by more than 20 per cent in November over the same month the previous year, at a record $1.16-million.Fred Lum/The Globe and Mail

Ontario’s provincial government is poised to increase its speculation tax for foreign property buyers, as record housing prices continue to soar.

A government official says the province plans in the new year to boost its non-resident speculation tax to 20 per cent from 15 per cent, while also applying the tax provincewide. That would extend the tax beyond the current boundaries in the Greater Golden Horseshoe area that stretches around Toronto from Niagara to Peterborough. The Globe and Mail is not identifying the official, who was not authorized to speak publicly about the plans.

The official said the province’s Progressive Conservative government has decided to act after the federal Liberals did not include a two-year ban on foreign property purchases – as promised in the past election – in their fall economic update released this week.

Are foreign owners of empty homes to blame for Canada’s unaffordable housing market?

The millennial and Gen Z dream of home ownership is being exploited in ways that just make houses more expensive

Federal Finance Minister Chrystia Freeland said on Tuesday that substantive new policies would not come until her spring budget and that it could take years to fix the housing market.

Ontario Finance Minister Peter Bethlenfalvy said in a statement issued after the federal update that his government “is prepared to act on housing affordability, including addressing foreign speculation in the province’s real estate market and we are calling on the federal government to do the same.”

The Toronto Regional Real Estate Board says the average home price – including condos, semi-detached and detached homes – in the Greater Toronto Area was up by more than 20 per cent in November over the same month the previous year, at a record $1.16-million.

However, according to realtors, the pandemic’s real-estate boom has been driven by Canadian residents, not foreigners. Canadians have been seeking bigger properties to work and live in during the health crisis, they say, and have taken advantage of record low mortgage rates to make their purchases.

Christopher Alexander, president of Re/Max Canada, said there are foreign buyers in the market, but that they are not a significant enough percentage to have any impact on price appreciation or depreciation. He called the planned tax hike a political move and said governments should instead be working to increase the supply of new housing.

During Toronto’s 2017 real estate boom, Mr. Alexander said, there were higher levels of buyers from China and the Middle East. But foreign buyers “all but dried up” as the pandemic hit, he said, although they started to return to the market near the end of 2020.

Open this photo in gallery:

Finance Minister Chrystia Freeland said on Tuesday that substantive new policies would not come until her spring budget and that it could take years to fix the housing market.Adrian Wyld/The Canadian Press

The province’s current 15-per-cent foreign-buyers tax, implemented in 2017 by the previous Liberal government, has done little to keep runaway prices in check across much of Southern Ontario, he said.

“This is a political ploy. Find a solution to increase supply.”

Recent Statistics Canada data show that the share of foreign-owned property in Ontario remained steady from 2019 to 2020. As of last year, foreigners owned 2.2 per cent of all residential property across Ontario, according to the Canadian Housing Statistics Program, which analyzed property assessments, land-registry data and tax filings.

The highest foreign-ownership rate was found in the City of Toronto, where foreigners owned 3.8 per cent of all residential real estate last year. That rate was higher for condos, of which non-residents owned 7 per cent, according to CHSP.

Douglas Porter, chief economist with Bank of Montreal, said the government’s new policy appears aimed at the smaller Ontario markets that do not already fall under the current foreign-buyer tax regime and where prices have risen significantly.

“The move speaks to the fact that smaller Ontario cities have been the hottest in the country,” he said. “Policy-makers are doing what they can to try to calm demand.”

Ontario opposition NDP housing critic Jessica Bell said Premier Doug Ford has done too little to address the housing crisis but that she supports expanding the tax to crack down on “rampant speculation” that has spread outside Toronto.

Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe