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Montreal draws ever-closer to implementing foreign buyer taxes

Tax

Montreal might soon follow Toronto and Vancouver’s footsteps in slapping an extra levy on foreign home buyers, amid growing signs that the influence of overseas capital holders in the city’s housing market is only getting stronger.

“We must avoid at all costs what is happening in Vancouver and Toronto, where 90% of projects are sold to investors. Montrealers must be able to own their own city,” Laurence Vincent, co-president of development company Prevel, said in an interview with Montreal-based markets observer Yury Shupilov.

Initially proposed by Projet Montreal back in spring 2017, mayor Valerie Plante maintained that such a measure is a sorely needed addition to the regulatory regime, considering the influx of foreign buyers pushed out by the Toronto and Vancouver taxes.

A warning issued by the CMHC a few months ago warned that the Montreal property sector was veering towards an overheated state. The Crown corporation also estimated that 1 in 8 buildings in the downtown area are now sold to foreign buyers.

Read more: Condo sales still driving the Montreal market’s dynamism

October numbers from the Greater Montreal Real Estate Board showed that sales of condos – an asset class that has magnetized foreign investors in Toronto and Vancouver – increased by 22% year-over-year, with 1,361 transactions completed.

For comparison, activity in the single-family and plex segments had only 6% and 5% growth during the same period, respectively.

“The condominium segment is booming. Thanks to strong sales and a sharp decrease in listings, the number of months of inventory has dropped significantly over the past year, falling from 10.2 months to 7 months,” GMREB Board of Directors president Nathalie Bégin said.

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