There has been much discussion about government intervention to cool the overheated Canadian housing market. In a recent statement Christopher Alexander, Chief Strategy Officer and Executive Vice President at RE/MAX of Ontario-Atlantic Canada, cautioned the government against implementing cooling measures, that have served as short-term fixes in the past, but have not provided a long-term solution to Canada’s housing affordability issue.
Rapidly escalating housing prices, mostly in southern Ontario, have led to calls to reconsider the exemption of the capital gains tax (CGT) on the proceeds from principal residence sales in the belief that it will slow or even reverse the current trend. The potential danger would be homeowners opting not to sell their homes because of the tax which could further decrease the supply.
Perhaps a more viable solution would be to build more affordable, family-sized housing like three-bedroom condos, and allow for more detached housing beyond our existing urban centres. Realistically, we can’t continue to fight urban sprawl while simultaneously expecting housing prices to cool.
What we’re seeing in the market right now is simple economics – low supply and high demand. We need more homes to meet Canadians’ current needs, while anticipating the housing needs of the 1.2 million people who are expected to immigrate to Canada through 2023. Maybe now is the time to consider expanding the boundaries of developable land and not implementing another tax.
It’s an interesting topic, that’s for sure!
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