In the Greater Toronto Area, we have seen a steady growth in our real estate market even with a couple of major changes that affected our market place in the last 5 years. One major change was in 2008 which was the additional land transfer tax that buyers paid on properties registered with the Toronto Land Registry Office. Since this is an out of pocket expense, some buyers have steered towards buying outside of Toronto. Mississauga for one has seen an increase in their sales since the implementation of the 2nd land transfer tax. It is for this reason alone that Bonnie Crombie, Mississauga Councillor, did not heed the advice from Mississauga’s Budget Committee to implement a land transfer tax as she sees it as they have a “competitive edge” over Toronto.
The second major change was this year’s lending guidelines. According to Jason Mercer, The Toronto Real Estate Boards’ Senior Manager of Market Analysis, the monthly sales in the “416” area dropped by an average of 650 – 700 per month. His overall forecast for the end of Q4 2012 and for 2013 is the following:
Sales: 88,000 sales for 2012 and 84,500 for 2013
Income Growth: 2% income growth for 2012 and 2.5% for 2013 bringing the average income to $106,000
Average Price: $500,000 for 2012 and $515,000 for 2013
Interest Rates: 0 – 25 bps increase from Bank of Canada
Below is a chart showing the amount a buyer would need to pay for the Provincial Land Transfer Tax and the 3rd column shows the extra amount if the property is registered with Toronto based on a purchase price of $500,000. The buyer would need to pay an additional amount of $5,725. With today's purchase prices, some buyers are having to put their purchase on hold to save more money, receive an increase in their income or buy outside the Toronto area.
For Torontonians it is not too late to speak up and try to get rid of the Toronto Land Transfer Tax. The Toronto Real Estate Board is working towards achieving the repeal of the extra tax. Click the "Let's Get It Right" logo and make your voice heard.