TORONTO, March 28, 2017 /CNW/ - Members of Mortgage Professionals Canada were pleased to meet with dozens of Members of Provincial Parliament and senior government officials today. Topics discussed included housing affordability, availability and accessibility and potential policy solutions to the growing imbalance within the Greater Toronto Area market.
"Housing affordability in the GTA and the surrounding area is becoming increasingly challenging for more and more Ontarians and we were pleased to lend our voice on ways we think the government can restore balance in the market," said Paul Taylor, President and CEO, Mortgage Professionals Canada. "Today's advocacy efforts have gone a long way in educating MPPs on the positive role that mortgage brokers play in the Ontario housing market through lower rates and increased competition."
It is clear that many regions in the province continue to cope with challenges around affordability and lack of supply. In the GTA, lack of supply is impacting affordability for many of the middle-class. Imposing a foreign buyers' tax does nothing to solve a lack of supply and could create adverse effects on the national, provincial and regional economies. We encourage the government of Ontario to continue to work with municipalities to remove barriers to development and find ways to encourage supply in the GTA, as well as help with affordability and encourage new home sales overall. Increasing supply through decreased red tape, increased investments in critical infrastructure and increased incentives for single family home construction would help alleviate some of the affordability challenges in the region.
Who We Are
Mortgage Professionals Canada is an industry association whose members include mortgage brokers, mortgage lenders, mortgage insurers and industry service providers. We have over 11,500 individual members nationally with over 6,000 members in Ontario and over 1,000 businesses across Canada.
The mortgage broker channel originates 34% of all mortgages in Ontario (33% in all of Canada) and approximately 50% of mortgages for first time home buyers. This represents around $80 billion dollars in economic activity across the country.
Characteristics of the Ontario housing market
- Affordability in the GTA is declining as a higher percentage of income is being spent on housing, however, there is no evidence that this is being driven by foreign buyers, who according to a recent survey from the Toronto Real Estate Board (TREB) account for 4.9% of the GTA market.
- The upward trajectory of Toronto's housing market has been driven by a lack of supply, according to TREB's MLS System. In February 2017, new listings were down on a year-over-year basis by 12.5%.
- According to data from the Ministry of Finance, MLS home resales increased in Ontario by 9.7% in 2016 from 2015.
- According to Statistics Canada, immigration and interprovincial migration helped raise Ontario's population last year by 186,000 which is putting additional pressure on housing supply in the province (CANSIM, table 051-0001). Meanwhile, housing starts only increased by 3,600 last year and actually decreased by 3,200 in Toronto according to CMHC.
- CMHC indicates that existing home sales in Ontario will peak in 2017 and we should see smaller increases in housing prices as market conditions restore some of the imbalances that have been growing in the province.
We applaud the government on its announcement to increase the land transfer tax rebate for first-time homebuyers and we encourage more such policies targeted at those looking to enter the housing market.
Our industry is helping the government achieve its goal of balancing the budget in 2017-18. According to recent data from the Ministry of Finance, the land transfer tax is $514 million above the 2016 Budget projection, reflecting the ongoing gains in Ontario housing resales and prices. The imposition of a foreign buyers' tax could potentially decrease government revenues, if housing activity is stalled, which will negatively impact the province's ability to balance its budget in 2017-18.
It is clear that many regions of the Ontario housing market continue to cope with challenges around affordability and lack of supply. In the Greater Toronto Area, the lack of supply in housing is impacting affordability for many middle class Canadians. Imposing a foreign buyers tax does nothing to solve a lack of supply in the GTA and could create adverse effects on the national, provincial and regional economies. According to TREB most foreign buyers purchase a home for their family, personal use or to provide a rental market with much needed supply, all this helps grow the economy and should be encouraged rather than suppressed.
In fact, looking at Vancouver's experience, a foreign buyers' tax has not improved affordability and has instead simply reduced housing activity. According to the Vancouver Real Estate Board, February 2017 had the lowest number of new listings since February of 2003, but the benchmark price for a detached property remains unaffordable for many at $1,474,200 in Vancouver. It is un-Canadian to blame foreigners for affordability concerns caused by lack of supply in the market.
What We Are Asking the Government to Consider
- We understand the need for action in the GTA housing market, however we have some concerns about introducing a foreign buyers' tax given the situation of the equivalent tax in Vancouver. If the government is considering moving forward with this policy, we recommend that a working group of industry experts and government be formed to study the economic repercussions of the policy before implementing it.
- Given the recent changes made by the federal government, which are making it harder for first-time homebuyers to enter the market, we encourage more incentives, such as the recent announcement of a larger rebate on the land transfer tax for first-time buyers, as a way to encourage more young people to enter the market.
- We recommend that the Ontario government continue to work with municipalities to remove barriers to development and find ways to encourage supply in the GTA, as well as help with affordability and encourage new home sales overall. Increasing the availability of supply through decreased red tape, increased investments in critical infrastructure and increased incentives for single family home construction would help alleviate some of the affordability challenges in the GTA.
SOURCE Mortgage Professionals Canada
For further information: Paul Taylor, President and CEO, Mortgage Professionals Canada, O: 416-644-5465, C: 905-334-1165, [email protected]