$720,850 in November, the highest level on record. Meanwhile, the annual sales also reached a record high last year, despite soaring prices, with over 630,000 homes changing hands.
The situation has prompted fears of the market going off the rails, but none of the host of solutions, from end to blind bidding to taxes on vacant home and foreign investors, have managed to tackle the crisis. New numbers this week show that Canada’s two most expensive housing markets pushing further into the stratosphere, with the benchmark price in the Greater Toronto Area reaching $1,208,000 last month, while in Vancouver, the figure was higher, at $1,230,200.
In both markets, houses for less than $1 million has become unheard of, and this is why a Vancouver based think-tank is making an eyebrow-raising proposal to impose a tax on homes $1 million or more. According to Generation Squeeze, a non-partisan, non-profit organisation advocating for young adults, has suggested that a progressive tax be levied on homes valued at more than $1 million, which would get progressively larger on homes valued at $3 million and above.
One of the group’s founders, Paul Kershaw, a professor at the University of British Columbia, says the levy would only apply to those on the very top of the real estate ladder, meaning over 90 per cent of Canadians would not have to pay a single penny to the tax. For homes valued at $1 million, a 0.2 per cent duty will be charged, while it would slide all the way up to 1 per cent on homes worth more than $3 million. According to Kershaw, this could bring in about $5 billion a year, which can be used to support purpose-built rentals and other measures aimed at discouraging speculation.
“A $2 million home — enough to rank a homeowner among the top two per cent of the country, in terms of housing wealth, he notes — would accrue a tax of about $3,500 annually,” he said, adding that even on a home worth over $3 million, the annual tax would amount to $13,500, which is roughly the same amount paid in regular income taxes by an individual earning $60,000 a year from their salary. Which is why the proposed tax bill is “a very modest number but larger policy signal,” he said.
