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Toronto’s Affordability Crisis: Are Foreign Buyers Really Responsible?

May 10 2017
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Since late 2016, the province of Ontario, more specifically Toronto, has been in an uproar about the housing supply affecting the city. This has raised skepticism for many residents of the GTA and brought foreign buyers into vogue. However, according to TREB only 4.9 per cent of housing transactions in 2016 for the region involved foreign purchasers which is much lower than Vancouver where 15 per cent of sales involved foreign buyers. These numbers indicate that it isn’t all foreign buyers looking to buy into the GTA’s housing supply but that it is substantial GTA residents. But is that really the reason why we are low on supply? The answer is no, the Fraser Institute estimates that approval timelines for new construction in the GTA average 14.4 months and in Toronto it averages around 17.7 months. Thus indicating that the main issue lies with bureaucracy and backlogs. The Province’s Places to Grow and Greenbelt policies took big chunks of land off the market which is increasingly making it difficult for builders to find sites on which to put up new housing stock. Therefore, it is not foreign homebuyers who are driving up home prices and making supply scarce, but the province’s ability to increase supply. Furthermore, blaming foreign buyers for driving up home prices might make those weary house hunters feel better but will be of any substantial benefit for fixing the GTA’s affordability crisis.

 

Source: Toronto Star

 

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