How involved should government be when it comes to cooling the housing market?

Finance Minister Charles Sousa said earlier this week that the upcoming provincial budget will include measures to cool the housing market. Reportedly, disappointment at the lack of measures in the recent federal fiscal plan prompted the announcement, although no specifics were forthcoming.

Speculation of what that might mean includes a foreign buyers tax or progressive property tax, but it won’t mean the imposition of higher capital gains taxes on real estate that doesn’t qualify as a principal residence, since it’s a federal matter. He had proposed it for inclusion in the federal plan.

A report last month by Ryerson’s City Building Institute expressed concern that an expanding housing bubble lures buyers into unsustainable purchases that, as the market “unwinds,” will mean their mortgages are underwater. “And the historical record is that they do unwind, essentially without fail,” said the report.

An OECD (Organisation for Economic Co-operation and Development) report says Australia’s own booming housing market, now showing “hints of a slowdown,” could mean “extreme vulnerability” for the country’s economy.

“A large drop-off in house prices could cut household consumption and increase mortgage defaults … The market may not ease gently but develop into a rout on prices and demand with significant macroeconomic implications,” the report said. “A continued rise of the market, fuelled by both investor and owner-occupier demand, may end in a significant downward correction that spreads to the rest of the economy.” Residents there are also in record levels of household debt.

Rising prices are thought attributable more to domestic than foreign buyers, so the report recommends government policy should pressure banks to limit mortgage lending for investment properties, an idea I haven’t heard bandied about too much here.

I’m not a fan of legislation that limits the reasonable pursuit of personal profit, so I’m not crazy about any of the ideas I’ve heard so far. What about you? How far do you think the government should get involved in private enterprise for the perceived greater good? What will it take to make it easier for a family to buy a home in Toronto?

Other interesting real estate stories from the week

Paramount Realty USA says a buyer who paid $1.39 million US for POTUS’s childhood home in Queens, NY, in just December sold it this week for $2.14 million US. If I were a betting man, that’s not one I would have made.

The Tudor-style home, in which #45 lived until the age of four, has five bedrooms, a five-car driveway, a fireplace, a sunroom and a panelled study. Trump called it “sad” on Jimmy Fallon’s Tonight Show.

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Toronto’s KPMB Architects have been shortlisted to design the new arts centre in Edinburgh. The mid-sized performance venue would include performance, rehearsal and recording space for the Scottish Chamber Orchestra; it would also have to include, of course, spectacular acoustics.

The six-team shortlist also included firms from London (three of them in fact) and Switzerland, as well as Edinburgh-based Richard Murphy. KPMB is responsible for numerous residential designs in the GTA, including the condos at Maple Leaf Square, numerous local office buildings, the Canadian Embassy Berlin, and countless other commercial projects from museums to shopping malls.

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The Ministry of Canadian Heritage on behalf of Tribute to Liberty this month revealed another shortlist: the five designs for the proposed Memorial to the Victims of Communism in Ottawa. The five designs were chosen last November as a result of a design competition, but the process was held up over debate about the appropriateness of the proposed site, which had been earmarked for a new federal court.  The winning design will be announced this summer; a survey posted at the beginning of the month is now closed, I’m afraid, but you can check out the designs here.