Mila towns . Why are house prices going crazy? The price of second-hand houses sold in Toronto has risen 16.9% over the same period last year. Everyone is surprised. Is this celebrating the success of the epidemic?
The following August, the price of second-hand housing sold in Toronto rose by 20.1% compared with the same period last year, and the increase continued to expand, in total defiance of the epidemic. I checked some local media analysis and found that the reasons for the rise in house prices against the epidemic were attributed to rising construction costs; speculation by new immigrants and non-residents; low interest rates; the refusal of baby boomers to sell houses; the number of new homes completed was lower than the number of new immigrants; property investors were active; and more companies were attracted to Toronto. It can be seen that many reasons are platitudes, whether there is an epidemic or not, so it can not explain the real and deep-seated reasons why house prices still rebound when the epidemic is not under control.
Ontario launched a non-resident property speculation tax NRST on April 20, 2017, on the grounds that non-residents are speculating in Canada, and the worst-hit area is the Greater Toronto area. The federal government immediately allocated $500000 to the Bureau of Statistics, and the results of the special survey came out in November 2017, because the results disappointed the government, just as the United States did not find weapons of mass destruction in Iraq. The proportion of non-residents owning property in the Greater Toronto area is only 3.4%. If only 3.4 of the 100 houses are owned by foreigners, how could these foreigners drive up the price of the remaining 96.6 houses? Since then, no one has mentioned the idea that non-residents have speculated on high housing prices, but the NRST of property speculation tax for non-residents is still there. The epidemic once again proves that most of the non-residents who work and study in Toronto for a short period of time live in rented houses and live more centrally in the lower Toronto city of down town, which is close to their schools or jobs. Judging from the plunge in rents in the region over the past few months, non-residents have been blocked from entering outside Canada, dealing a heavy blow to the rental market. The property prices of downtown down town have not plunged as much as rents, which also shows that non-residents have little impact on housing prices and have a great impact on rents.
Recently, I listened to a wonderful interview by the economist Sherry Cooper on the landlord’s website. When the host asked her how to interpret the strong rebound in house prices during the epidemic, she still thought that the hot money brought in by new immigrants pushed up house prices. Apart from this point of view, I 100% agree with her on other issues. The federal investment immigration program was suspended in 2014, and most of the idle people who came to Canada with their money bags were shut out, and only a few provinces accepted investment immigrants on and off. The current composition of new immigrants is very healthy, mostly from experienced immigrants who graduated from Canada, who are younger and more able to bring vitality and income taxes to Canada, rather than just buying houses like investment immigrants. More healthily, starting from the end of 2018, banks have comprehensively tightened the new immigration policy on mortgage loans, and new immigrants also have to look at their income. Overseas income documents have become more and more stringent, and it is impossible to easily obtain mortgage approval with only 35% down payment. The number of new immigrants landing fell sharply during the epidemic, and if it was new immigrants who pushed up house prices, they would at least halve rather than rise. It can be seen that the established reasons are too easy to be accepted and remembered, even economists are not immune from vulgarity.