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Toronto to See Another Year of Double-Digit Price Growth

Foreign buyers back in spotlight, fueling speculation city might act to cool market

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Toronto's house prices are set to climb higher.

Roberto Machado Noa / Getty Images
Toronto's house prices are set to climb higher.
Roberto Machado Noa / Getty Images

Toronto is gearing up for another year of double-digit house price increases, which will no doubt reignite concerns about foreign buyers snapping up much of the available inventory.

A report Tuesday by the Toronto Real Estate Board predicts that house prices in the Canadian city will rise by as much as 16% to $850,000 this year.

More:Toronto’s Housing Market Continues to Heat Up

This will be driven by strong demand (sales will crash through the significant 100,000 barrier for the third consecutive year) outpacing the chronic lack of homes coming to market.

"Active listings at the end of December were at their lowest point since before the year 2000. It is unlikely that the shortage of listings will improve to any great degree over the course of the next year," said Jason Mercer, director of market analysis at the TREB.


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Higher prices will likely pile more pressure on the city’s policymakers to take action on foreign buyers, following in the footsteps of Vancouver, which slapped a 15% sales tax on them last year.

However, the TREB said that opting for a foreign buyer tax in Toronto to cool the market instead of looking at the supply side would be "misguided".

It stressed that under 5% of transactions that its members dealt with last year involved a foreign buyer and that the majority were not planning to leave their homes empty for vast swathes of the year.

The Board argued that any additional tax on foreign buyers could have unintended consequences, including less rental supply as the number of investors who purchase and rent out  properties could decline, and stronger price growth in neighboring regions without a tax.

More:Toronto Could See More Americans After Trump Win

"Housing affordability, and affordable home ownership in particular, is a growing concern," said John DiMichele, chief executive of the TREB.

"While governments have been focusing their policy solutions on allaying demand, what is needed are policies that focus on the lack of available homes for sale and for rent," Mr. DiMichele said. "The public, private, and not-for-profit sectors need to come together to focus on innovative solutions to the housing supply issue."