Homeowner clients in the Greater Toronto Area (GTA) should brace themselves for a possible tax on speculative home purchases, according to the chief economist of the Canadian Real Estate Association.

Gregory Klump says he would not be surprised to see policy-makers roll out such a measure just as the market begins to recover from the most recent round of changes.

"I don't think they're done yet," Klump said during an Economic Club of Canada roundtable in Toronto Wednesday.

The Ontario government introduced a suite of policies in April aimed at cooling runaway house prices in the Greater Golden Horseshoe region, including a 15% tax on foreign buyers and expanded rent controls.

Home sales in the GTA fell by 20.3% in May, the month after the new rules took effect, suggesting that the measures are having the desired impact.

However, some economists say the impact may be short-lived like it was in Vancouver, where the introduction of a foreign buyer tax caused a temporary pause in activity before it picked up again.

Klump says he could see it taking about six months for the housing market in the Toronto area to gather steam again, provided that no new measures are introduced between now and then.

He says he believes a speculation tax would be misguided because such measures typically do little more than temporarily change market sentiment — pushing buyers to the sidelines for a bit while they wait to assess the impact.

Loopholes could allow some speculators to get around paying the tax, Klump says.

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