Ontario HST Rebates Boost Single-Family Home Sales While Condos Lag
Ontario’s HST rebate on newly built homes boosted sales of single-family houses in the province and helped prevent job losses in the construction and real estate sector, according to an industry report.
But condo sales have continued to falter across the province much as they have in the Toronto region.
“The trend everywhere is single-family home sales rising and condos not,” said Justin Sherwood, chief operating officer of Building Industry and Land Development Association (BILD), one of five industry groups that contributed to the report, released on Tuesday.
The temporary HST rebate provides a maximum discount of $130,000 on a new home priced up to $1.5-million and it expires at the end of March.
There were 7,215 sales of detached houses and single-family homes in Ontario in the first three-month period after the tax break took effect on April 1, according to calculations by Peter Norman, a commercial real estate expert and one of the authors of the report. He used data from multiple sources including Altus Group, where he was the chief economist for many years.
That was more than two times the volume of the second quarter of last year and about 15 per cent higher than the 10-year average for the same period.
There were 1,195 new condo sales in the province in the second quarter, according to the report. Although that was 12 per cent higher than the same period last year, it was 88 per cent below the 10-year average for that quarter.
New single-family home sales outpaced new condos in every part of the province. In the Toronto region, where there are thousands of unsold condos, single-family home sales more than tripled year over year to 2,699 units in the second quarter, according to data from Altus.
In comparison, new condo purchases in the Toronto area rose 38 per cent to 775 units over the same period.
In Hamilton, single-family home sales nearly tripled year-over-year to 66 purchases in the second quarter, whereas new condo sales dropped slightly to 36 units over the same period.
In Kitchener-Waterloo, single-family home sales more than tripled to 297, but the number of new condo transactions dropped 30 per cent to 29 units in the second quarter, according to Altus.
Because of the increase in low-rise home sales, some developers and brokerages started rehiring staff.
Mr. Norman calculated that the second-quarter sales were responsible for creating or preserving 17,300 construction, real estate and homebuilding jobs.
Under Mr. Norman’s previous estimate earlier this year, about 100,000 construction and related jobs were at risk of disappearing if new home sales remained at last year’s levels for a prolonged period of time.
Developers, real estate brokerages, drawing renderers and other businesses have already cut jobs to deal with the prolonged downturn, which began in the latter half of 2022.
The HST rebate was implemented to reinvigorate the homebuilding industry and help developers get rid of unsold condos.
This article was first reported by The Globe and Mail
