Ontario's foreign buyers tax hike won't have much affect on already cooling market: experts

Housing industry observers say Ontario's surprise move Monday to increase the tax paid by foreign homebuyers to 25 per cent won't have much affect on the province's already-cooling market.

While BMO Capital Markets chief economist Douglas Porter believed foreign buyers were a big contributor to past market run-ups, he doesn't think they've been responsible for the price and sales increases of the last few years.

Porter says that means a higher tax won't quell the market and he questions the timing of the decision because sales and prices are already down from pandemic highs.

The Canadian Real Estate Association says September's national average home price sank 6.6 per from the same month last year to sit at $640,479, while sales slumped 32.2 per cent over the same period.

The non-resident speculation tax has sat at 20 per cent since March, when the government hiked the rate from 15 per cent and expanded it to apply provincewide.

Greater Toronto Area broker Daniel Foch says Monday's hike doesn't make much sense because the federal government is already on track to ban foreign investors by Jan. 1, so he sees the provincial move as a way to squeeze a last bit of cash out of non-resident buyers.

This report by The Canadian Press was first published Oct. 25, 2022.