Interest rate hike could prolong Toronto housing market slowdown: Economist
TORONTO — The Bank of Canada’s interest rate hike could prolong the cooling-off period the Toronto housing market is experiencing following the implementation of a provincial foreign buyer tax, a prominent economist said Wednesday.
But the recent drop in the number of home sales in the Greater Toronto Area — down 37.3 per cent in June from the year prior — is not expected to last long-term, said Benjamin Tal, deputy chief economist with CIBC World Markets.
A similar slowdown occurred in the Vancouver area — another hot housing market — following the implementation of British Columbia’s foreign buyer tax a year ago, but Tal said the measure hasn’t deterred non-resident buyers and the market is rebounding.
“We haven’t seen a significant decline in foreign investment activity in Vancouver following the tax,” he said. “What led to the slowdown was really more domestic buyers waiting to see what the tax will do.”