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Thursday, March 30, 2017
6 ideas to help Toronto housing issues
Distinguished economist Benjamin Tal says that rentals "must be part of the solution" to the GTA housing problem
The GTA is not a normally functioning market due to a history of legislation failure, as well as a severe lack of land;
House prices, while always on the rise in the GTA, have followed a “predictable path” until 2016, when the average-home price increase spiked by 17.3% and is currently at over 20%;
Unexpectedly, condo prices followed suit to almost parity, rising by 16% in the fourth quarter of 2016;
Contrary to the perception that there are “too many condos”, condo sales increased by a record 34%, while the supply was down by 6%;
The demand for housing in the GTA is not only strong but “stronger than perceived” due to “undercounting of the number of non-permanent residents”;
Government intervention to prevent the house prices to grow at this rate, such as foreign tax policy and new mortgage rules do not make a significant difference in an atypical market such as the GTA
An increase of supply of rental units is desperately needed in the GTA for a “real and lasting change”;
The GTA’s rental market has “never been hotter” with average rent rising by a record of almost 12%;
The new wave of renters (young families) will need “stability of long-term renting”;
For builders in the 416 area, the gap between the profitability of condos and profitability of purpose-build is very narrow; on surplus land, it makes even more sense to favour purpose-built;
Incentives from the government on new rental projects will make the difference between an “affordable and an unaffordable GTA housing market”: expediting the approval process for purpose-built projects, allowing higher intensification rates and cutting the HST will ultimately encourage builders to complete purpose-built projects before a full-blown affordability crisis.