TORONTO, February 15, 2017 – Ontario’s Temporary Financial Accountability Officer, the Honourable David Wake, released The Impact of a Housing Market Correction on Ontario’s Fiscal Position, a commentary providing the FAO’s assessment of risk to Ontario’s finances from a potential housing market correction.
While the FAO is forecasting house prices to stabilize over the next four years as higher projected interest rates dampen housing demand, there is a risk that Ontario could face a sharp decline in house prices and housing market activity. This would affect a broad range of taxes, including the Land Transfer Tax, Harmonized Sales Tax, Personal Income Tax and Corporations Tax.
To assess the impact of a potential housing market correction on the Province’s fiscal plan, the FAO constructed scenarios that would lead to a 10 to 20 per cent decline in average house prices over the next four years. Under these scenarios, the FAO estimates Ontario revenues could fall between $0.6 to $1.2 billion in 2017-18 and between $1.2 to $2.2 billion by 2020 compared to the FAO’s fiscal projections presented in the Fall 2016 Economic and Fiscal Outlook. Read the FAO’s commentary here.
About the FAO
Under the Financial Accountability Officer Act, 2013, the Officer provides independent analysis on the state of the Province's finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. Visit our website at http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.