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Canada, Ontario face hard choice as Toronto home bubble builds
April 17, 2017 / 7:28 PM / 4 months ago

Canada, Ontario face hard choice as Toronto home bubble builds

Construction workers chat on a condominium building site in Toronto, Ontario, Canada October 3, 2016.Chris Helgren

TORONTO (Reuters) - Officials from Canada and its most populous province will meet on Tuesday to try to cool Toronto's hot housing market, under pressure from voters angry that speculators or foreigners are fueling a bubble in Canada's largest city.

While no immediate action is expected from the gathering of Finance Minister Bill Morneau, Ontario Finance Minister Charles

Sousa and Toronto Mayor John Tory, all three are pushing for policy options to contain prices without crashing the market.

The average price of a home in Toronto rose by 33 percent to C$917,000 in March from a year earlier, a report showed on Tuesday.

The sharp rises have led to fears first-time buyers are being priced out of the market.

"I have three young millennials at home and I don’t know how in the world they’re going to get a starter home to get into the market," Sousa told CBC News ahead of the meeting.

Sousa and Morneau have jockeyed back and forth over who is responsible for the increasingly feverish market, and appear at odds over whether a tax on speculation or foreign investment is the best approach.

"Everyone is worried: what if this is the measure that crashes the market?" said John Andrew, director of Queen's University Real Estate Roundtable.

Voter anger could drive Sousa to act first, with the provincial Liberal government suffering in opinion polls and measures to address "affordability" already promised in his April 27 budget.

"You're looking to raise your family and grow in the community and you're being outbid and outpriced by people that are just using it as a commodity," said Fred Altbaum, 34, a marketing professional struggling to buy a home with his wife and daughter.

Like many others, Altbaum is calling for either a foreign buyers tax - like the one imposed in Vancouver in August - or a change to capital gains taxes to discourage investors from flipping properties.

A foreign buyers tax will slow but not stop money coming from Chinese investors, said real estate broker Tony Ma, whose HomeLife Landmark Realty Inc is one of the largest brokerages in Toronto serving buyers of Chinese descent.

But even Ma, who said only 5 to 8 percent of the 10,000 deals his 1,100 agents did last year involved foreign investors, thinks it is time for the government to do something about the housing bubble.

"Prices have jumped too fast," he said.

Writing by Andrea Hopkins in Ottawa; Editing by Chizu Nomiyama and Andrew Hay

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