It’s a controversial subject – as is the case whenever discussing macroprudential policy – and broker sentiment is already pouring in.
“Any addition intervention (has) to be GTA specific. Other communities outside the GTA have been flat for several years. Supply is the issue in GTA,” one MBN reader commented in the forum. “Address building regulations, not mortgage regulations.”
Brokers flocked to the comment section after one big bank argued region-specific policies are required to address affordability in Toronto.
“The trajectory of the Greater Toronto Area’s (GTA) housing market is not written in stone. It’s largely a function of policy,” Benjamin Tal, CIBC’s chief economist, said in his latest research note. “Policymakers are needed because the GTA is not a normally functioning market. Legislation-driven land constraints suggest that we are in a classic case of market failure, in which the invisible hand will not find the optimal path.”
It’s an opinion shared by some brokers, it seems, with one arguing the issue at hand is Toronto’s costly land transfer taxes that prohibit many from moving up – and freeing up important inventory for potential first-time buyers.
“Supply is the problem and that stems from the double land transfer in the city of Toronto. First time buyers can't afford to trade up which is keeping supply tight,” Omer Quenneville, a Toronto-based broker, said. “I have a client looking to trade up to a new development and the cost of levies and double land transfer tax comes to $30,000.00. Government tax and regulation policies got us into this mess and it won't get us out.”
MBN
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