this post was submitted on 21 Mar 2025
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PM Mark Carney Announces Elimination of GST on New Homes (www.cpac.ca)
submitted 2 days ago* (last edited 2 days ago) by merc@sh.itjust.works to c/canada@lemmy.ca
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First time home buyers will not be charged GST (5%) when buying a home, as long as the place they're buying costs less than $1M. This means that people buying a home for the first time will save up to $50k on their purchase.

Edit: Note, GST is mostly only charged when buying newly built homes, so this won't have any effect for people buying used homes.

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[–] merc@sh.itjust.works 10 points 2 days ago (4 children)

Making it easier to buy a home for a first-time homebuyer is good. But, this is also going to cause more inflation in home prices. It's basically the government kicking in up to $50k of the price a new buyer will pay. That means that the amount a new home buyer is going to be willing to offer for a house will go up by about 5%, and anybody else trying to buy the same home will have to match that bid or lose out.

If this is a temporary thing, then it's a very nice gift to first-time home buyers. And, being fair, it's mostly first-time home buyers who need the help. Anybody who already has a house is already on the "property ladder" and has been able to just sit back and watch their houses appreciate in value much faster than even the superstar stocks on the stock market while they do literally nothing. But, in the long run, this just makes the problem of insane housing prices worse. I'd love it if it were matched with a big tax on the sale of houses by people who own multiple properties. But, that's not going to be popular during an election season.

[–] HonoredMule@lemmy.ca 3 points 2 days ago (1 children)

Shouldn't it be a big tax on the sale of houses to multi-property owners? They're the ones to discourage, not the people reducing their real estate portfolio.

[–] merc@sh.itjust.works 2 points 2 days ago (1 children)

Good point. I was just thinking of taxing the transaction, but you're right that if a multi-property owner wants to slim down to just the house they live in, they shouldn't be taxed for doing that.

[–] HonoredMule@lemmy.ca 2 points 2 days ago

I figured it was loose grammar rather than explicit intent, but my inner pedant hates relying on assumptions. 🙂

[–] wise_pancake@lemmy.ca 2 points 2 days ago (2 children)

Yes, but making new homes cheaper and more in demand will increase demand for them and that’s where developers can increase supply

[–] merc@sh.itjust.works 2 points 2 days ago

Your economics is all screwed up.

The whole point is that this isn't making homes cheaper, it's making homes more expensive, but the government is picking up part of the tab. First time home buyers will be willing to pay a higher price for a given newly built house because some of the money they'll be spending won't be their own. If people who aren't first time home buyers want to compete, they'll also have to pay more for the same house.

[–] howrar@lemmy.ca 2 points 2 days ago (1 children)

Isn't high demand the whole reason that prices are so high to begin with?

[–] wise_pancake@lemmy.ca 2 points 2 days ago

The issue is elasticity of supply

Housing is relatively inelastic, it’s expensive and takes a long time to build and is sensitive to interest rates.

Improving demand for the most flexible portion of the market might result in increased supply from developers.

[–] UraniumBlazer@lemm.ee 1 points 2 days ago (1 children)

It's still a step in the right direction tho, eh? Of course, it needs other policies in addition to it like:

  • MANY preapproved house designs to spend less time in bureaucracy. I think Carney's already doing that, right?
  • Removing single family zoning. This comes under provincial/municipal governments from what I know. My municipality has already done this.
  • The big tax thing you suggested. I would go ahead and say that there should be an outright ban on owning more than 2/3 properties by private individuals/corporations (this excluded non profit housing coops). But yeah, it'll be wildly unpopular. See how the carbon tax turned out.
[–] merc@sh.itjust.works 4 points 2 days ago

Yeah, it will help a bit. But it's a really, really big problem. I think it's going to take decades to fix. But, if they can at least make it so house prices stabilize and only increase at the same rate as everything else in the economy, that would be a big step in the right direction.

[–] Kecessa@sh.itjust.works 0 points 2 days ago

New homes means newly built, right? So if a model sells for 300k the company building it can't just increase the price to 315k to compensate as it would mean losing the non-first-time home buyers who are willing to pay 300k as customers.