With Canadians getting ready to head to the polls in just over a month, one question continues to weigh on many voters: will housing ever get more affordable?
Housing affordability is a prominent ballot box issue this election, ranking fourth out of nine top concerns for voters in a recent Ipsos poll conducted for Global News, with the top concern being inflation and the cost of living.
Canada’s major political parties have announced measures they say will help housing affordability, with both the Liberals and the Conservatives promising to waive the GST on newly built homes.
But experts are divided on whether that plan will work.
Carney’s plan vs. Poilievre’s plan
Liberal Leader Mark Carney and Conservative Leader Pierre Poilievre have both proposed eliminating the GST on new builds under a certain value.
Currently, Canadians buying new construction homes are required to pay five per cent GST/HST, unless the fair market value of the new home is under $450,000.
Carney’s plan would remove the GST for newly built homes up to a price of $1 million, only if the person buying the home is a first-time buyer.
“My new government will eliminate the GST for first-time homebuyers on all new and substantially renovated homes under $1 million,” Carney said on Thursday in Edmonton.
Poilievre would remove the GST on newly built homes to $1.3 million for all homebuyers, not just first-time buyers.
“Conservative Leader Pierre Poilievre announced today that he will axe the federal sales tax (GST) on new homes up to $1.3 million,” a Conservative press release said on Tuesday.
The proposals come after tariffs imposed by U.S. President Donald Trump on Canada have slowed the spring housing market down, with some saying it was “dead on arrival.”
John Pasalis, president of Toronto-based real estate brokerage Realosophy, said these proposals are aimed at driving up demand in the market.
Get breaking National news
For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen.
“There’s a big gap between what buyers are willing to pay and what builders need to sell at,” he said.
Pasalis said there is one key difference between the plans: who they target.
“The Liberal plan is targeted to end users, to families who want to buy their own home. If you think about how the condo market works in Toronto, it’s largely driven by investors, or at least has been. So, a policy like Poilievre’s is effectively a tax subsidy on investors to buy more condominiums and in particular, micro-condos,” he said.
Poilievre says the move would spur the construction of new homes and help more people get on the property ladder.
Carney says his plan would also spur the construction of new homes.
Shawn Zigelstein, a broker at Royal LePage, said the ceiling in both plans — $1 million in Carney’s plan and $1.3 million in Poilievre’s — was too low for some markets.
“In Toronto or Vancouver, you need that higher number. There’s no doubt about it. When you start to look at product other than a condominium, you’re not going to find product that is under that $1.3-million mark. To get under $1 million is going to be very, very difficult,” he said.
Zigelstein said buyers in smaller markets, however, could see some gains.
“Realistically, they may be saving $50,000 to $60,000, depending on the price point that they’re looking at,” he said.
“Their mortgage payments are going to drop because their final purchase price is going to drop. And that money then does not need to be financed over the term of the mortgage.”
What are other parties proposing?
The other federal parties haven’t pitched the same type of GST cut on housing, but do have their own proposals on housing policy.
NDP Leader Jagmeet Singh has said he will set aside all suitable federal Crown land to build more than 100,000 rent-controlled homes by 2035.
The NDP has also vowed to publicly finance new construction projects and speed up approvals on lands owned by the federal government.
The Green Party has promised to launch “the biggest public housing construction program since the 1970s” and stop corporations from buying up single-family homes.
“We’ll strengthen housing market regulations. Most importantly, we’ll get the federal government back in the business of building housing,” the Green Party said on its website.
The Bloc Québécois has yet to release its 2025 platform on its website, however, in the past, the party has called on Ottawa to use surplus federal lands to build community and affordable housing and promote co-ops.
Pasalis said he would like to see both the Liberal and Conservative plans amended slightly.
He said he would restrict the Conservative plan to first-time homebuyers and would raise the limit of the Liberal plan to $1.3 million.
“I would actually up that [Carney plan] to the $1.3 million, but wouldn’t force people to buy under $1.3 million, meaning if you buy just over [the limit], you still get the tax benefit, but you only pay the GST on the difference between what you pay and the $1.3 million,” he said.
Home sales in Canada declined 10.4 per cent annually in February, data from the Canadian Real Estate Association (CREA) showed on Monday, with the annual average price of a home in Canada dropping 3.3 per cent.
The activity has slowed significantly, even compared with January, with the number of newly listed properties in Canada falling by 12.7 per cent.
Trump’s trade war has made Canadians reluctant to commit to large purchases, such as homes, given the uncertainty about whether the country will tip into recession and if layoffs could hit.
“People are sort of waiting on the sidelines before entering the market. An offer like this wouldn’t necessarily impact the market significantly, because many home buyers actually don’t know of this five per cent GST,” said Rishard Rameez, CEO of realty firm Zown.
Pasalis added that the rebate is unlikely to bring Canada’s housing market back to life in the short term.
“In the short term, it’s not going to have a big impact. In the short term, the resale housing market is dead because people are worried about job security. But eventually this will pass. Eventually, we’ll probably have some more clarity and stability. People will jump back into the market,” he said.
Rameez added that there are no quick fixes, and a GST rebate was not the biggest incentive to homebuyers waiting in the sidelines.
He said the two biggest barriers to homeownership in Canada today were down payments and mortgage rates.
“For many Canadians who do not own a home today, to save up for that down payment, they need to be able to save money from their monthly paycheque,” he said.
The minimum down payment required to get pre-approved for a mortgage remains high across Canada.
According to NerdWallet Canada’s monthly down payment monitor, a B.C. resident in February would have had to have $71,435 in the bank to get approved for a mortgage.
With an average sale price of $964,349 for a home in B.C., the 20 per cent down payment would come to $192,870.
“We need to be able to build the economy where people can actually save rather than living paycheque to paycheque,” Rameez said. “And I’ve been there as a person who is forced to pay [high] rent and pay this high cost of living. It’s almost impossible to save the down payment.”
Zigelstein said while the GST rebate targets new builds, the problem is that not enough affordable housing is being built in Canada.
“As long as new home construction is there and it’s affordable for people, then the buyers will go towards that. I think the bigger problem right now is finding affordable product for the average Canadian, the first-time homebuyer,” he said.
Pasalis said the rebate will also do little to cut construction costs.
According to the Canada Mortgage and Housing Corp., Canada needs 5.8 million new homes by 2030.
Carney and Poilievre both vow to axe GST on new homes. Will it help?
