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A Toronto real estate lawyer warns introducing a tax on foreign homebuyers would be devastating for the Toronto housing market.

His warning came Tuesday after a prominent economist said it was only a matter of time before the surcharge would come into effect in the Greater Toronto Area.

"So much of [Toronto's real estate] is owned by foreign owners, and we welcome their investments," said Toronto real estate lawyer Bob Aaron.

"It's important to our economy to have foreigners investing here. If we cut off the supply it's going to say Canada is no longer open for business, we're closed for business, we don't want your money; that's going to reverberate throughout the economy."

This summer, British Columbia introduced a 15 per cent tax on foreigners buying property in Greater Vancouver. In a statement Tuesday, Ontario's finance minister Charles Sousa explained there are no plans at the moment to implement a similar tax in Toronto.

"Our government will continue monitoring the housing market in both Ontario and B.C. over the course of the next few months to see the impacts of the recent decision by the government of B.C." Sousa said in a written statement.

Sales in Vancouver dropped 26 per cent in August compared to a year ago, following the introduction of the tax on Aug. 2.

"The perception of the tax, rather than the tax itself caused a slump in the market and if we had a slump in the market the default rate in mortgages across the board would be horrible," Aaron said. "The banks cannot risk that level of default, and it will happen."

Prices in Vancouver continued to rise, however, with the benchmark price for all residential properties climbing 31.4 per cent from a year ago to $933,100.

Some industry observers, including CIBC senior economist at Benjamin Tal, have voiced concerns that Vancouver's new 15 per cent tax on foreign buyers could send investors to Toronto, driving up prices in a market that is already scorching.

At City Hall Tuesday, Mayor John Tory said he would continue to give the same "non-answer" he's given for months on the tax — he's not sure the foreign buyer phenomenon in B.C. is a problem in the GTA.

"I know there's a problem with affordability ... and as yet, there's no one that's reached any conclusions or given me any advice that there's an identifiable problem that we can attach a solution to."

The mayor said more details about his plans for the future of housing in Toronto would be made available Sep. 30 at the Affordable Housing Summit in Toronto.

"We are watching it very closely and the main thing that I'm focused on ... is increasing the supply of affordable housing. That, I think, is the single thing that I know we can do," said Tory.

The Toronto Real Estate Board (TREB) echoed the mayor's concern that it is too early to support or nix the idea of a tax on foreign homebuyers.

"I don't think there's enough information there to make the hard and fast conclusion that we have seen a carry over of would be foreign buyers from Vancouver into the Toronto market," said Jason Mercer, the director of market analysis with TREB.

The provincial government and the housing industry isn't in a position to create policy on foreign buyers, because no one tracks the amount of foreign buyers purchasing homes in Toronto, Mercer said.

The Canadian Mortgage and Housing Corporation (CMHC) recently issued a report highlighting that the share of foreign ownership of condos in the Toronto CMA was 3.3 per cent in 2015.

In the last federal budget, $500,000 was allocated to address the "data gap" on the amount of foreign activity in Canada's housing market.

But stakeholders, including TREB, say the priority needs to be ending the chronic shortage of supply of housing in Toronto.