New Policies to Dampen Strong Demand
Housing is rosy, but the government is biting its nails over it. A bubble burst is expected to take place any time soon. New rules had to be put in place to curb strong demand. The government was able to come up with some which they announced in April. Specific goals for implementing these rules include:
- Protect renters and buyers from agents selling and reselling properties for multiple gains.
- Weaken foreigner buying. New taxes were imposed for non-Canadian buyers. This will also increase government coffers that can be used to build more houses to increase supply.
- Level the playing field by charging private rental housing units the same taxes that residential units pay. Prior to this, no taxes were imposed on private rental housing.
- Slow down purchases in the Greater Golden Horseshoe. A 15-% tax was introduced for properties sold in this area.
As soon as the government made the announcement, prices started dipping. Can the immediate response be sustained? The housing market condition prior to the announcement was extremely strong. Here’s a quick look on how strong it was in March and in the months before it.