Measures to promote supply are needed, but the resulting new-build supply won’t be cheap.
Housing in Toronto and Vancouver is very expensive, and it is going to get worse.
The respective provincial governments took action to combat the rapid price growth in these metro areas, with the biggest moves being taxes aimed at foreign buyers. The immediate reaction to the taxes were huge declines in transactions in the resale market.
Market interventions on the demand-side of the equation are the best solutions short-term, but they may not have a lasting impact on the market unless paired with processes aimed at encouraging supply.
Vancouver and Toronto have targeted supply measures to free up homes left empty by their owners, as well as actions to curb short-term rental platforms like Airbnb (to add those homes back into the rental stock).
Supply measures take time, and the average resale house price in the Greater Vancouver area is now approximately $70,000 above the peak price prior to the market intervention last year, demonstrating that the impact of the foreign buyer tax was temporary.