The Ontario government's recently announced tax rebate on new homes is already shaking buyers off the sidelines in and around the Greater Toronto Area, especially for single-family properties, those in the real estate industry say.
Immediate Impact on Sales
In late March, the provincial government announced a full rebate on the Harmonized Sales Tax (HST) on new homes priced up to $1 million and purchased between April 1 and March 31, 2027. The rebate will save new homebuyers as much as $130,000. It didn't take long for homebuyers to respond, suggests Justin Sherwood, chief operating officer at the Building Industry and Land Development Association (BILD), which conducted an informal survey of real estate developers towards the end of April.
“They sold more homes in the first couple of weeks of the HST announcement than they did in the previous three or four months combined,” said Sherwood, summarizing survey responses. The latest monthly new home sales data align with what homebuilders had been reporting anecdotally. Buyers snapped up 901 new single-family homes across the GTA in April, up from 241 during the same month a year ago, according to a report from BILD. That’s 21 per cent above the 10-year average for the segment, which includes detached, linked, and semi-detached homes as well as townhouses but excludes stacked units.
Pricing as a Key Driver
“I would say the 13 per cent HST rebate is the icing on the cake that is moving people off the sidelines,” Sherwood added. Pricing, he said, is the primary incentive. The average asking price of a new single-family home in the GTA this April was $1,421,835, representing a 7.1 per cent year-over-year decline, as per the BILD report. “Pricing now is probably as good as it’s ever going to get,” added Sherwood, who noted prices have fallen about 20 per cent since their peak.
Developer Experiences
Rosehaven Homes is among GTA-based developers who have witnessed renewed buyer interest at their new home sites following the HST rebate announcement. “The HST rebate is making a big difference,” said Stefano Guglietti, vice president of high-rise sales at Rosehaven. “It is the single largest tax incentive or government incentive for the housing industry in a generation, really, so it is a big deal, and I think people are recognizing that,” he added.
On May 30, Rosehaven launched sales at its first new development in about two years. The developer had been on pause due to soft market conditions, but, after observing a sizeable uptick in visits to its other sales centres, Rosehaven decided to move forward with Springside Trails, a collection of about 165 single-family homes in Midhurst, Ont. More than 70 people showed up to the sales office this past weekend, said Guglietti. “The strongest interest came from families and move-up buyers looking for more space, detached-home living, and a quieter community setting while still being close to Barrie and commuter routes,” he said in a follow-up email. “The team also saw interest from buyers coming from the GTA who are looking for better value, larger homes, and a more nature-connected lifestyle.”
For Mattamy Homes, the homebuyer reaction has also been hard to ignore. “Over the past three months, Mattamy Homes has seen an influx of visitors to our sales centres,” said Brent Carey, a spokesperson for Mattamy. This increased foot traffic has translated to total April and May sales across Mattamy’s 15 active projects in the GTA doubling compared to the previous six-month averages. “Our low-rise communities in Oakville, Mississauga, Kitchener, Milton, Markham and Pickering have seen the most demand so far,” he added.
Condo Market Lags Behind
The response to the rebate has not been as enthusiastic for condos, Mattamy, Rosehaven, and others agree. “What we see in the condo space is not close to the type of boom we saw in the low-rise,” said Oben Necip, vice president, sales and new development, at Corcoran Horizon Realty, which handles pre-construction sales for developers. “The condo market is still heavily investor-based, and the investors are still kind of on the sidelines,” he added. Nonetheless, there are some signs of increased high-rise activity. New condo sales totalled 199 in the GTA this April, up from 143 a year ago, according to BILD. However, condo sales remain 88 per cent under the 10-year average.
More clarity on the rollout of the rebate — which will be applicable to homes purchased today but has yet to be implemented as it requires regulatory changes from the federal government — should boost confidence for condo buyers and encourage more to enter the market, said Sherwood.
Outlook for the Market
In the meantime, Sherwood expects the rebate to continue to feed demand for single-family homes, albeit not as much as in the first weeks of April. “It was a flood, and now it’s just busy,” he said. “It will probably slow down a little bit across the summer, as it always traditionally does, and then ramp up again in the fall.”
