New foreign homebuyer tax could impact Simcoe Muskoka market

The province is attempting to fix the housing crisis that has seen record-breaking sale prices in Simcoe Muskoka in recent years, which ultimately pushed out first-time homebuyers.

On Wednesday, the provincial government announced it is looking to solve this issue by increasing the housing supply and hiking its tax on foreign homebuyers.

"Now that it's going to be raised to 20 per cent it's going to have a larger impact on people who are speculating," said Remax Hallmark Chey realtor Bill Burton.

The long-time Barrie realtor said now that the tax applies to the entire province and not just the Greater Golden Horseshoe Region, it could open the door for first-time buyers.

"This is going to help people to not be in competitions so much with people who have deeper pockets," he noted.

The news comes as houses sell in Simcoe County at an average of $1 million.

Realtor Peggy Hill said the current prices of homes are pushing first-time buyers out, which is a growing problem leading to an unhealthy market.

"It's really hard for first-time buyers to get into this market, and without them, unfortunately, we can't have a good market because they help push everybody else up," said the CEO of The Peggy Hill Team.

Hill added that she's noticed the market has begun to cool over the last several weeks as supply increases.

She said she's hopeful that single-family homes would become easier to obtain for first-time buyers with more supply.

"The thing that impacts real estate is supply and demand, and right now, our supplies are rising," said Hill.

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NEW TAX NOT LIKELY TO IMPACT MUSKOKA MARKET

Home prices have also surged in Muskoka during the pandemic.

Bob Clarke, the president of Clarke Muskoka Realty, told CTV News houses have gone up about 50 per cent over the past two years.

He said, although the foreign tax hike could have an impact elsewhere in the province, most of the homes in Muskoka are being sold to Ontarians.

"The reality is I don't think this will have a significant impact. Foreign buyers are a small portion of our marketplace," he said via FaceTime.

The Ontario government is launching another round of 10 new consultations and setting up a housing supply working group with municipalities and the federal government To find more ways to boost the housing supply.

The 20 per cent tax on foreign homebuyers will kick in immediately.