MONTREAL — Quebec’s finance minister says he has no plans in the near term to introduce a foreign buyer’s tax on Montreal homes but is open to the idea if one is needed.
Carlos Leitao says his department is closely monitoring whether a 15 per cent tax on foreign buyers in the Greater Toronto Area will have a large spillover effect on Montreal real estate prices. Ontario introduced the tax in late April and British Columbia implemented a similar levy in Vancouver last August.
“We just want to be prepared that if it needs to be done then we can do it quickly, but I don’t have any plans to do anything in the short-term,” Leitao said in an interview Friday. “The red flag is the behaviour of prices.”
The number of foreign buyers in Greater Montreal is ”relatively marginal,” he added.
“When we look at housing market bubbles the presence of foreign buyers is one element but I’m not even convinced that it’s the main element.”
Montreal may be Canada’s second-largest city and one of the world’s most cosmopolitan, but when it comes to house prices it remains a relative bargain.
The average prices of all homes in the Montreal area was $364,373 in April, roughly a third of what they are in Vancouver and 40 per cent of property prices in Toronto. And while that represents a year-over-year rise of 7.9 per cent, that still lags the national increase of 10.4 per cent over the last year.
The number of homes purchased by foreigners in Montreal increased by 62 per cent during the first nine months of 2016, but they still only account for about 1.5 per cent of all transactions, according to the Canada Mortgage Housing Corp.
Two large mortgage providers and commercial lenders in Quebec — National Bank and the Desjardins Group — have said they see no need for a foreign buyers tax, with Desjardins Group CEO Guy Cormier recently saying he sees “no real estate bubble forming.” But Citi Research analyst Dana Peterson said Montreal could be the next logical place for foreign investors to park their money.
Valerie Plante, the leader of Projet Montreal, the city’s main opposition party, said she fears there will be a rush of foreign buyers that could make it more unaffordable for lower-income residents. She has vowed to fight this fall’s municipal election in part on gaining powers from the province to impose a tax on foreign buyers if conditions warrant.
“We should be doing everything we can to make sure that Montreal stays a city that is affordable to all kinds of people, not only the lucky, the rich ones,” she said.
Leitao said he has no plans to grant that authority to the city.