Ontario’s temporary Harmonized Sales Tax (HST) rebate has defrosted parts of the new housing market but Toronto condos are still on ice.
For the first time in three years, single family home sales rose above historical norms in April. Condos, however, remained near record lows, according to data released by Building Industry and Land Development Association (BILD) and Altus group on Wednesday.
Toronto recorded 1,100 new home sales last month, more than triple the number sold a year ago but still 55 per cent below the 10-year average. Low-rise accounted for 901 of those sales, 21 per cent above the long-term average, and condo apartment sales came in at 199 units, 88 per cent below the historical norm.
“There hasn’t been much response from buyers to this program,” Edward Jegg, research manager at Altus Group said of the rebate during a condo market webinar accompanying the release.
Instead, Jegg explained that the strongest response to the rebate has been seen in lower-priced, ground-oriented housing types like stacked condos.
“This rebate has flipped the script, and now it’s the low rise that’s actually leading the way,” Jegg said. “For the last 10 to 15 years, Toronto has been much more of a condo market than a single family market,” he said.
According to BILD, the HST relief program and pent-up demand that accumulated during the housing market’s downturn have helped bring homebuyers back into the low-rise segment.
The association also noted substantial affordability improvements before the rebate took effect.
“Prices have been about 20 to 25 per cent down from the peak of 2022, and then on top of that, you would layer on another 13 per cent (HST savings),” said BILD’s chief operating officer Justin Sherwood.
In March, Ontario Premier Doug Ford and Prime Minister Mark Carney announced that all homebuyers can now qualify for a one-year exemption from the HST on newly-constructed homes valued at $1 million or less, with partial rebates for higher-priced homes.
Although the provincial aspect of the bill passed in the budget, the federal bill has only gone through its first reading — meaning full implementation of the HST rebate is still incomplete.
BILD said, “greater clarity” on how to get the rebate is urgently needed to spur further activity.
Still, within the first month of the incentive rollout, which started April 1 and runs until March 31, 2027, the condo market continued to overflow with inventory and weak investor demand.
BILD recorded 13,331 units of unsold inventory in April, consisting of 4,757 units in pre-construction projects, 6,259 units in projects under construction and 2,315 units in completed buildings.
The association also said that institutional investors have started to step in. Sherwood said 29 units near Toronto Metropolitan University were purchased as part of a larger bulk acquisition expected to eventually total 300 rental units.
“Additional bulk purchases are expected to close in May and June,” he said.
• Email: shcampbell@postmedia.com