Ontario's temporary Harmonized Sales Tax (HST) rebate has defrosted parts of the new housing market, but Toronto condos remain firmly on ice. Despite a tripling of overall new home sales in April compared to a year ago, condo sales plunged 88 percent below the historical average, according to new data from the Building Industry and Land Development Association (BILD) and Altus Group.
Low-Rise Sales Surge, Condos Lag
Toronto recorded 1,100 new home sales in April, more than triple the 350 sold a year earlier, yet still 55 percent below the 10-year average. Low-rise homes accounted for 901 of those sales, coming in 21 percent above the long-term average. In contrast, condo apartment sales totaled just 199 units, a staggering 88 percent below the historical norm.
“There hasn't been much response from buyers to this program,” said Edward Jegg, research manager at Altus Group, during a condo market webinar. He noted that the strongest response to the rebate has been seen in lower-priced, ground-oriented housing types like stacked condos. “This rebate has flipped the script, and now it's the low rise that's actually leading the way. For the last 10 to 15 years, Toronto has been much more of a condo market than a single family market,” Jegg added.
Pent-Up Demand and Price Drops
According to BILD, the HST relief program, combined with pent-up demand accumulated during the housing market downturn, has helped bring homebuyers back into the low-rise segment. The association also noted substantial affordability improvements before the rebate took effect. “Prices have been about 20 to 25 percent down from the peak of 2022, and then on top of that, you would layer on another 13 percent (HST savings),” said Justin Sherwood, BILD's chief operating officer.
In March, Ontario Premier Doug Ford and Prime Minister Mark Carney announced that all homebuyers can now qualify for a one-year exemption from the HST on newly constructed homes valued at $1 million or less, with partial rebates for higher-priced homes. Although the provincial aspect of the bill passed in the budget, the federal bill has only gone through its first reading, meaning full implementation of the HST rebate is still incomplete. BILD said “greater clarity” on how to obtain the rebate is urgently needed to spur further activity.
Inventory Glut and Investor Weakness
Within the first month of the incentive rollout, which began April 1 and runs until March 31, 2027, the condo market continued to overflow with inventory and weak investor demand. BILD recorded 13,331 units of unsold inventory in April, comprising 4,757 units in pre-construction projects, 6,259 units in projects under construction, and 2,315 units in completed buildings.
The association also noted that institutional investors have started to step in. Sherwood said 29 units near Toronto Metropolitan University were purchased as part of a larger bulk acquisition expected to eventually total 300 rental units. “Additional bulk purchases are expected to close in May and June,” he said.
