By Graeme McNaughton/The Oshawa Express
With housing prices continuing to rise, mayors and regional chairs from Durham Region and across the Greater Toronto and Hamilton Area want to know what Premier Kathleen Wynne is going to do about it.
Municipalities across the region have been hit with double-digit growth in housing prices over last year, and it has left growing numbers being priced out of the market.
“I think this is a very urgent situation,” Wynne said in a news conference following the meeting.
“I think that people are anxious about their ability to find a place to live, because that’s what this is about, whether we’re talking about rental or being able to purchase a home.”
House prices have seen sharp increases over the last year. According to the Durham Region Association of Realtors, the average selling price for a home in Durham Region in March was $697,896, marking a 42.5-per-cent increase over March 2016. Detached homes sold for an average of $767,959.
Prices in Toronto are reaching even higher levels. In its latest report, the Toronto Real Estate Board states the average selling price for a home in March was just under $900,000, with detached homes selling for an average of more than $1.56 million.
While no details have been revealed as to how exactly the provincial government would cool the GTHA housing market, the premier has said measures would be introduced soon.
However, according to Regional Chair Roger Anderson, the premier should be cautious about artificially cooling the market.
“It’s a supply and demand issue. Go back to 1989 and 1990 when prices were going up through the roof, and then they started raising interest rates. Well the demand went real quick, and so did the prices. If you throw something in there that artificially changes the prices, then it’s the same thing,” he tells The Oshawa Express.
“You’re going to have a market adjustment that’s significant, probably somewhere between 20 and 30 per cent. Well, when people have mortgages on their house and it drops 30 per cent, in some case that drop might be as much as what their mortgage is, so they have to be very careful when they try to control prices of property.”
Anderson says one way to slow things down would be to look westward, and see what was done there – however, that would only fix part of the problem.
“I follow the Vancouver model of the foreign buyer’s tax. That would certainly slow the market a little bit, probably, but I still believe it’s a case of demand,” he says.
“The demand is higher than what the supply is. As long as there’s not a supply, there’s going to be a demand. If everybody who wants to sell their house in 2017 listed it in the next couple of weeks, prices would drop.”
For those not in the market to buy homes, but facing growing rental prices, the provincial government has also suggested changing the rules around rent control.
Currently, rent can only be increased by an amount set out by the province – this year, it is 1.5 per cent – in buildings constructed before 1991. Newer buildings are free from those restrictions.
Anderson says the province needs to tread carefully on possibly expanding rent control measures, as it could lead to problems with these newer buildings.
“If you get into rent control, you got big companies that are building rental units in Durham, if they think that they can’t build and continue to maintain and keep them the way they want to keep them, they’re not going to be building them. And the first thing that goes on big companies when they start getting frozen and their budget lines are frozen is maintenance. You can just look at social housing complexes and hospitals and schools and even regional buildings – the first thing they slice is maintenance,” he says.
“If inflation goes up seven or eight per cent and you can only raise your prices two per cent, you’ve got to find that money somewhere.”
Some measures on cooling the housing market are expected as part of the upcoming provincial budget, set to be tabled on April 27.