"We face a structural financial challenge caused by the fact that -- unlike the provincial and federal governments -- Toronto government revenues do not grow with the economy."

It's strange that the two taxes he proposed for the city also don't grow as the economy grows.

Actually, the housing market is a strong indicator of how the economy is doing, as consumers are less likely to purchase/invest in a home when the economy is rough.

Well if you say the land transfer tax grow with the economy, then does that mean the property tax also grow with economy, since consumers building houses will drive up property value?

Real estate tends to be price inelastic, meaning that supply will usually help to allevate demand, causing prices to less responsive.

The current surge in housing prices in GTA is a bit of an annomaly-- in fact, dozens of guest speakers in my land development class has mentioned that Toronto is the one of the hottest residential markets in North America.

I'm sure it's a number of reasons why Toronto is doing so hot. Perhaps its the continued confidence from consumers. Perhaps it's the restrictions in land supply from Places to Grow and Greenbelt Acts. Perhaps its the continued high levels of immigrants to Toronto.

So to sum up, there isn't a direct translation between the health of the economy and property value. Supply of housing, construction labour, for example, need to be considered as well.

Am I making any sense?