TORONTO – Mayor John Tory says he plans to discuss Toronto’s lagging rental supply, a vacant property tax and the lack of real estate data when he meets Tuesday with the federal and Ontario finance ministers to consider solutions to the city’s dwindling housing affordability.
The meeting marks the first time that Tory, federal Finance Minister Bill Morneau and provincial Finance Minister Charles Sousa will meet in-person to discuss the issue.
“Probably one of the most important things we can do is stay in touch with each other on something that is as volatile and complicated as this issue,” Tory said in an interview Monday.
“You don’t want to cause undue upset in a marketplace, notwithstanding the deep concern people have about the affordability of housing.”
BMO chief economist Douglas Porter said he doesn’t expect any particular measures will be announced following the meeting, adding that any changes are more likely to be unveiled as part of the provincial budget next week.
For weeks, the accelerating pace of real estate prices in Canada’s largest city have alarmed and perplexed policy-makers.
The average price of a detached house in the Greater Toronto Area hit $1.21 million last month, climbing 33.4 per cent from a year ago, according to the latest data from the Toronto Real Estate Board.
The repercussions have been felt further afield, with price hikes spilling over into municipalities such as Hamilton, Barrie and St. Catharines as buyers find themselves priced out of Toronto.
Sousa is expected to address the issue in his budget. A number of measures have been floated as potential solutions, including taxing speculators and foreign buyers.
Last week, the head of the Bank of Canada warned of growing speculation in the Toronto housing market and said a correction there could reverberate in other parts of the country.
Governor Stephen Poloz said the roughly 30 per cent increase in Toronto prices had “divorced” itself from economic fundamentals, cautioning that any market rising at such a pace is vulnerable to a correction.
A sizable real estate correction in a market with as much weight as Toronto could affect people’s expectations well beyond the city limits, he added.
Tory said he has had meetings with numerous housing experts and they all seem to have contradictory views about what to do. But one thing they see eye-to-eye on is evidence of speculation, he said.
“There’s fairly widespread agreement that there’s an element of speculation that’s found its way in to this marketplace,” said Tory, though he added that expert opinions differ on what is causing it and what should be done to address it.
In a letter to Sousa and Tory earlier this month, Morneau wrote that he convened the meeting to give them an opportunity to discuss ways to make housing in the Greater Toronto Area affordable and accessible over the long term.
Morneau’s office made the invitations to Sousa and Tory public, but if any new concrete measures arrive in the coming weeks, it will likely be up to Ontario and Toronto to do the heavy lifting.
Since taking office in late 2015, the federal government has twice taken steps in an effort to cool scorching housing markets, especially Toronto and Vancouver.
The federal changes have included a new requirement for 10 per cent minimum down payments on homes over $500,000 and stress tests on all insured mortgages to determine whether a borrower could still make payments if interest rates rise or their incomes decline.
Ottawa has also launched consultations on a policy that could see banks shoulder more of the risk for mortgage defaults.
But there’s concern that expansion of blunt federal tools that have cross-Canada reach could hurt less-worrisome markets.
For now, Morneau, a Toronto MP, is expected to keep the federal powder dry and proceed in the role of collaborator.
Spokespeople for both Morneau and Sousa said they expect the discussion to be productive and look forward to exchanging ideas.
—With files from Andy Blatchford.