The recently announced move to remove the provincial portion of the harmonized sales tax (HST) on new homes could impact housing affordability in Barrie, Mayor Alex Nuttall says.
On March 26, the Ontario government announced it would eliminate HST on new homes for all buyers, a measure aimed at accelerating construction and improving affordability.
The change means buyers would no longer pay the 13 per cent tax on newly built homes, potentially saving tens of thousands of dollars depending on the purchase price.
Nuttall said the HST removal could have a significant impact on the local real estate market.
“That’s going to have an immense impact on the market,” he said.
“If you think about the cost of housing – if it’s a million-dollar home, which is many single-family homes in the City of Barrie today, that is a 13 per cent, $130,000 saving on the cost of the home.”
Nuttall said the change could be particularly meaningful for first-time buyers and younger residents who have struggled to enter the housing market.
“We have a real problem with the ability for young people being able to purchase that first home – rent can be too high to save, and the cost of home is too high,” he said.
He pointed to a hypothetical starter home priced at $600,000. With the HST removed, the cost could drop by roughly $70,000, bringing the price closer to $530,000, assuming savings are passed on to buyers.
“It’s a large amount – it’s a game-changer for an industry that’s kind of on hold,” he said.
“That $600,000 home becomes $530,000 — this can make quite a difference here in Barrie, seeing how so many new homes are being built right now and more are coming in the not-too-distant future.”
Beyond affordability, Nuttall said the policy could also help revive a slowing construction sector.
“Right now, I think the housing market is basically shut down,” he said.
“We’re not seeing any construction take place. It’s hitting the trades – the impact is widespread.”
He said fewer housing starts affect not only buyers but also workers in construction and related industries.
“This is as much about jobs at this point as it is about housing itself,” he said.
“If all of a sudden there’s no work because the construction industry is shut down, that’s a real negative.”
The mayor added the City of Barrie is considering complementary measures, including potential adjustments to development charges, to further support housing construction.
“You’ll see more houses under construction and ultimately we’re going to see more people end up in homes that they’re able to afford,” he said.
