In a bid to boost housing starts, the Ontario government just announced a major win for first-time home buyers. They are removing the eight per cent provincial portion of the HST on new homes up to $1 million.
What was first announced in the 2025 Fall Economic Statement, could provide up to $80,000 in savings off the cost of a new home. When you combine it with the federal government’s five per cent HST rebate, the total savings could reach $130,000. This provides major savings for buyers trying to get into their first home. The province plans to align eligibility with the federal guidelines, applying the rebate to agreements of purchase and sale entered into between May 27, 2025, and 2031, with construction starting before 2031 and substantial completion before 2036. The property must also be used as the buyer’s primary residence.
However, affordability remains an uphill climb. The Bank of Canada cut the over night lending rate by .25% to 2.25% this week but the five-year bond yield which drives fixed mortgage rates actually went up. So while the tax relief helps, the lending environment remains challenging.
First-time buyers who typically make up about 35% of new home purchases will continue to face the toughest path, with the cost-to-income ratio still well above historic levels.
Although housing will continue to be challenging for first time buyers, we are finally starting to see coordinated efforts by two of the three levels of government to keep housing with the reach of young professionals and families, particularly in the GTA. Now if we could only get the municipalities on board to lower levies and development costs that would signal a BIG WIN. These changes represent small steps, but steps in the right direction.
Brandt Morris | The Morris Code | Live. Buy. It.
