He bought a new home in 2024. Now, he says the HST rebate has lowered the value and he can't sell

Following the news of the expanded HST rebate for new build homes, Killeen said properties in his new-build development subdivision — some of which are still under construction — are placing downward pressure on the value of his home, which he bought two years ago. 

“I don’t like when the government makes decisions that it’s basically random as to whether or not it benefits you,” he said. “It’s not really equitable to Canadians. It’s great for builders. It’s not good for anybody that currently owns a home.” 

Killeen and his wife, both retired, bought their first new build property in September 2024 in Belleville (a two-hour drive east of Toronto) for around $649,000. The couple made some upgrades to the house — remediated it for radon and installed water softener to better protect plumbing — that a realtor told them added value to the property. 

While prices in market have dipped in the last two years, the upgrades Killeen made to his home would have helped offset any price depreciation, his realtor told him.

But if the couple were to sell now, after the new policy announcements, they’d have to put their home on the market for $609,000 — a $40,000 loss, their realtor informed him. 

“We have to wait until after this (rebate) ends, which is projected to be all the way to March of next year, right?” he said. “It turns all of our planning kind of up in the air.” 

The expanded HST rebate is for all buyers of new homes for up to one year, allowing a maximum rebate of $130,000 for homes costing between $1 million and $1.5 million, which then gradually drops to $24,000 at the $1.85 million threshold. (That $24,000 rebate has been on the books for the past 15 years or so.)

The federal and provincial government also announced an $8.8-billion fund aimed at cutting municipal development charges by up to 50 per cent, which the building industry has long seen as a significant barrier to building more housing at lower costs.

While the rebate is intended to stimulate the floundering new build sector from record-low sales that have stalled and cancelled projects outright, it doesn’t help the thousands of Canadians who bought new builds just before the announcement was made, as they are likely to see the value of their property fall. It also doesn’t relieve buyers who bought preconstruction during the market peak and are struggling to close on their units as completions near, experts say.

“I’m trying to put myself in the place of a young couple, or anybody who purchased a new home, say a year or so ago, in good faith. They scrimped and saved and took out a big mortgage and paid their HST and the big development charges which are in the cost of the home,” said Andrew Sancton, fellow-in-resident at C.D. Howe Institute, a public policy think tank. 

“And then they hear that development charges will be reduced and there’s going to be an HST holiday. These people, I would think, would be very upset,” he said, adding that these homeowners paid more for the property than someone purchasing in the near future and that the value of their home has, or will likely, drop.

“Housing is not something that you consume like groceries, it’s an investment and the very act of reducing the prices now by some deliberate mechanism causes trouble for the people who have already made the investment previously,” Sancton said.

Shaun Hildebrand, president of real estate research firm Urbanation, said around 44,000 new condos are under construction in the GTA and those units were pre-sold at the market high with prices of $1,300 a square foot. The resale value on those units is now “well under $1,000,” Hildebrand said, and those buyers don’t benefit from the HST rebate. 

“There’s obviously going to be some challenges with arranging financing and closing on those units — that’s a challenge that’s going to be with us for sometime.” 

Killeen says hopefully more housing will be built with the slate of new policy changes, but said it doesn’t make housing more affordable, even with the price drops. 

“If they said it was going to be for starter homes that would be different, but this is to stimulate building houses,” he said. 

Last year, the federal GST rebate was first announced for first-time homebuyers, but was recently expanded to all purchasers of new homes with the Ontario government. 

Nemoy Lewis, assistant professor at Toronto Metropolitan University’s School of Urban and Regional Planning, said at the end of the day the policy helps to reduce some upfront costs for eligible buyers of new homes, and move stalled developments along.

But a tax savings on a home purchase is “not the same thing as a meaningful affordability strategy,” he said, adding that affordable housing stems from building more nonmarket units.

“In one sense, it will help some households at the point of purchase, but it does not address the deeper forces that are driving the housing unaffordability in this city and many urban centres in this province.”