If you have been following my column, you have seen me write at length about the need for governments to take meaningful steps to help correct the current state of the housing market in Ontario. I have highlighted that greater market certainty, coupled with a boost in consumer sentiment to get potential homebuyers off the sidelines, is essential for genuine improvement in the market and to avoid economic fallout across the province. On March 25, the provincial and federal governments announced some time-bound tax measures that are game changers and make now the best time to buy a new home in recent memory.

Game changing measure

Fittingly at a new home construction site, Premier Doug Ford, along with the Ontario Minister of Finance and the Minister of Municipal Affairs and Housing, announced a temporary elimination and reduction of the harmonized sales tax (HST) on new homes in Ontario for all new-home buyers. This new measure is a game changer and sends a clear message that housing affordability is a top priority for the provincial and federal government and signals a commitment to protect Ontario jobs and the wider economy. It also presents a very clear opportunity for those wanting to buy a new home.

Already in effect, homebuyers now have until March 31, 2027 to take advantage of tax savings on any new home purchase. The new measure removes the HST on new homes with a purchase price of less than $1 million, and reduces the sales tax on new homes priced between $1 million and $1.85 million for the next year.

To paint a picture of this new tax policy in practice, if a new home in Ontario costs less than $1 million, homebuyers will be exempt from paying the full 13 per cent HST on that new home, saving them potentially up to $130,000 through this mechanism.

If the price of a new home in Ontario ranges from $1 million to $1.5 million, this policy change allows for a flat rate of $130,000 in sales tax reductions. For homes with a purchasing price between $1.5 million and $1.85 million, there will be a declining tax reduction from $130,000 to the existing $24,000 rebate amount.

These sales tax cuts also apply to homes created through substantial renovations, which are treated as new housing for tax purposes.

Choice and selection

With housing prices in the Greater Toronto Area (GTA) already having moderated by 20 to 25 per cent since their peaks in 2022, this new measure presents a tremendous buying opportunity. When the new sales tax relief is accounted for, homebuyers are looking at 33 to 38 per cent lower pricing for new homes versus the highs of 2022. This kind of pricing has not been seen in almost a decade.

When this is combined with current inventory levels of some 20,000 new homes available for sale in the GTA, it provides choice and selection not seen since the early 2010s.

In addition, the lower pricing will increase purchasing power and will improve mortgage qualification outcomes, allowing more buyers to enter the market and make their dream of homeownership a reality.

As an industry, we are very grateful to the Ontario and federal government for taking this bold and decisive action. However, to the potential new home buyer – the message is clear – there has never been a better time to buy a new home, and like ads often say – for a limited time only.