Will Proposed GST Cut for First-Time Buyers Improve Affordability?
As Canada’s housing affordability crisis deepens, political leaders and policymakers are floating new ideas aimed at easing the burden for first-time buyers. One such proposal comes from former Bank of Canada Governor Mark Carney, who has suggested removing the GST on new home purchases under $1 million for first-time homebuyers. The appeal of this idea is obvious: by eliminating the 5% federal tax on qualifying homes, buyers would see a significant drop in their upfront costs—potentially saving tens of thousands of dollars . But as with any policy aimed at the demand side of the housing equation, the real question is whether it can meaningfully shift affordability, or whether it simply fuels more demand in an already strained market . A Policy Designed to Expand Access—But With Limits Under current rules, the federal GST rebate for new homes starts to phase out at $350,000 and disappears entirely at $450,000 —a figure far out of sync with today’s market conditions in most ...