Opposition Leader Pierre Poilievre announced Monday that if his party forms the next government, he will cut the federal sales tax on new home sold for under $1 million, a move that the Ottawa Real Estate Board said would have very positive impacts for Ottawa consumers.
The announcement shows “greater transparency” with homebuyers, said OREB president Curtis Fillier, by “cutting out the middleman” and eliminating costs that directly impact housing affordability.
“Real estate is so expensive to the consumer at this point, it is a good move,” said Fillier. “[Homebuyers] can actually see that they’re getting a reduction, that the government is doing something for them.”
Poilievre said his party will fund this plan by shutting down $8 billion of programs, particularly the Federal Housing Accelerator Fund and the Housing Infrastructure Fund, which help municipalities with the cost of building homes.
Despite the intentions of the two funds, Fillier said it is not always evident that the saved costs are passed down to the consumer. That’s where Poilievre’s plan comes in.
“With the bureaucracy behind the two funds, [homebuyers] just don’t always see it in the end price themselves,” he explained. “But cutting the GST will be very transparent to them, so I do think it’ll make a positive impact.”
Government charges account for more than 30 per cent of the cost of a new home in Ontario, the news release said, and Poilievre will also be pushing the province to remove their side of the sales tax from new home sales.
The average home price in Ottawa is sitting around $700,000, Fillier confirmed, so some of recent federal policies that impact more expensive homes don’t have much sway in the Ottawa market.
For example, earlier this month, Finance Minister Chrystia Freeland released updated down payment requirements. A week earlier, she announced Ottawa would be increasing the price cap for insured mortgages from $1 million to $1.5 million, and expanding the 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
But at that time, Fillier said the move would only offer a “small bump” given the valuation of homes in Ottawa, which usually fall under the $1-million mark.
In September, the benchmark price for single-family homes was $729,000, a 0.5 per cent increase from last year, according to the MLS Home Price Index. In comparison, the benchmark for a townhouse/row unit was $500,000, which is down 1.7 per cent from last year.
The majority of new builds in Ottawa are between $700,000 and $900,000, Fillier said, so Poilievre’s plan will have a “huge impact” for first time home buyers.
According to a news release from the Conservative Party, cutting GST will result in 30,000 extra homes built each year and generate more income for construction workers and businesses, as well as $2.1 billion of revenue for the government.
“It will be interesting to see where those stats and that math came from to see how that pans out,” Fillier said. “But this would definitely bring down that cost of new housing under that sub-million and make it a little bit more affordable for somebody to get into that market.”
