Why high taxes drive Canadians to more affordable provinces

A new report has brought attention to the trend of homebuyers moving out of Canada's largest and most expensive real estate markets in search of affordability and lower taxes, as reported by Newswire Canada.

The report, focusing on market conditions across six provinces including Vancouver, Calgary, Winnipeg, Toronto, Montreal, and Halifax, has revealed a significant "exodus" of homebuyers to provinces like Alberta and Atlantic Canada.

This shift, driven by high taxes, record housing prices, and elevated mortgage rates, has been notably prominent post-pandemic, with nearly 60,000 Canadian homebuyers changing provinces in 2023.

Christopher Alexander, president of RE/MAX Canada, expressed that the current housing market realities have made it unsurprising for buyers to seek homeownership across the country.

He highlighted the appeal of Alberta, noting its lack of provincial sales tax and land transfer tax on residential real estate, which, combined with affordable housing values and job opportunities, attracts cash-rich buyers from more expensive provinces like Ontario and British Columbia.

The move towards more affordable markets is underscored by recent municipal tax increases, which have further strained affordability. Specifically, a proposed 9.5 percent property tax hike in Toronto by Mayor Olivia Chow has caught the public's eye, with the city council set to discuss the proposal on February 14.

The report also points out the heavy tax burdens on new home construction in Toronto, where taxes, levies, and development fees can account for 25 to 30 percent of the purchase price of new condominiums, and government fees significantly inflate the cost of low-rise housing.

Alexander stressed that affordability and opportunity are crucial for a healthy real estate market and economy. He warned that the ongoing migration out of certain provinces due to affordability issues and tax increases could have alarming economic impacts on those regions' futures.