This year has been marked by policy initiatives from the federal and provincial governments to move the needle forward on tackling housing affordability in Canada. The provincial government has proposed an HST rebate for first-time buyers, but will this proposed rebate be enough to make a meaningful difference in affordability? Let’s dive in.
A New Rebate Aimed at Helping First-Time Buyers
Affordability remains a persistent challenge for first-time buyers in Ontario. However, conditions are beginning to shift, with rising inventory, modest price adjustments across the province, and lower interest rates creating a more favourable environment for those ready to enter the market.
To add to this momentum, the Ontario government has proposed an HST rebate for first-time buyers, in the firm of a full rebate of the 8% provincial portion of the HST on newly built or substantially renovated homes valued up to $1 million. For buyers eager to make their move, this could be a step in the right direction to boost affordability and confidence. When combined with the federal 5% HST rebate, buyers could save up to $130,000 off the cost of a new home. These measures are designed to reduce upfront costs and encourage construction. Still, affordability challenges remain a key barrier, raising the question: Will it be enough to bring first-time buyers back into the market? REMAX research shows that 54% of Canadians believe this fall is a good time to strike a deal and incentives like this could further encourage first-time buyers to act.
What Buyers Could Save
Both the provincial and federal rebates could help first-time buyers save up to $130,000 in total on newly built homes valued up to $1 million. The Ontario rebate alone would cover the full 8% provincial portion of the HST, adding to as much as $80,000 in relief, while the federal government proposed 5% rebate, which could save buyers up to $50,000 more.
The proposed rebate builds on Ontario’s existing HST New Housing Rebate, which already offers up to $24,000 in tax relief to eligible buyers. Together, these measures would significantly lower upfront costs and support those looking to purchase new construction.
However, the impact may be limited for many entry-level buyers. The rebate applies only to newly built or substantially renovated homes, which tend to be more expensive and take longer to complete than resale properties. While the initiative would help ease costs for those able to buy new builds, high home prices and borrowing costs continue to make affordability a challenge for many first-time buyers.
Who Would Be Eligible
The HST rebate is aimed specifically at helping first-time buyers finally take the step into homeownership. To qualify, buyers would need to be first-time owners, purchase a newly built or substantially renovated home that they plan to use as their primary residence. The timing also matters to qualify. The agreement of purchase and sale must be signed between May 21, 2025, and 2031, with construction starting before 2031 and completed by 2036. By focusing on first-time buyers and newly built homes, the program is designed to support those entering the market for the first time while helping boost new housing supply across the province.
Why Ontario Is Acting Now
Ontario’s proposed rebate is part of a wider effort to tackle housing affordability and boost housing supply, which aligns with Canada’s broader Build Canada Homes plan. Together, these initiatives aim to remove barriers to construction and make it easier for families to find and afford a home. The goal is clear: reduce costs for families, encourage new home construction, and address the housing shortage that’s kept many first-time buyers on the sidelines. Although these measures are designed to improve the housing market over time, their impact on affordability may take years to fully materialize. For now, Ontario’s proposed HST rebate offers a step in the right direction, one that could give new buyers a better shot at entering the market.
Industry Weights In
The proposed rebate has sparked a wave of mixed reactions across the housing industry, with many experts calling it a meaningful step toward improving affordability. In contrast, others question if it’s enough. The Building Industry and Land Development Association (BILD) described the measure “a step in the right direction” amid a challenging housing market. The Residential Construction Council of Ontario (RESCON) praised the cohesiveness between the federal and provincial tax relief efforts, while the Association of Municipalities of Ontario (AMO) said that the rebate could “boost buyer demand and help increase new home construction” The Ontario Home Builders’ Association (OHBA) called it “important progress” while acknowledging that broader affordability issues remain. REMAX Canada President Don Kottick welcomed the move as a positive development for first-time buyers:
“This is a great move by the Ontario government to help make homeownership more attainable for first-time buyers. Affordability has been a major challenge, so more support and incentives like this are definitely needed. That said, it’s still important for buyers to do their homework — make sure they qualify, understand the costs involved, and take a close look at their overall budget. With lower interest rates and policies like this coming into play, it’s an encouraging sign for anyone looking to get into the market.”
A Promising Moment for First-Time Buyers
The timing of Ontario’s rebate couldn’t be more fitting. According to REMAX’s latest Canadian housing market outlook, conditions across the country are beginning to shift in favour of buyers. After a cautious start to the year, more Canadians are feeling optimistic that now could be the right time to make a move.
Across Ontario, listings are on the rise year-over-year in most markets, while prices have softened in key regions such as Toronto and Hamilton. These shifts have created a more balanced environment, with buyers gaining more choice and negotiating power after years of dealing with limited inventory.
In several Ontario markets, prices are expected to drop. For many, the combined effects of lower interest rates, price drops, increasing inventory and policy support, including the HST rebate for first-time home buyers, can help restore confidence in the market.
These factors signal a market that’s gradually shifting and finding its footing. For cautious buyers who’ve been waiting for the right time, this time of year represents a turning point, one that combines new incentives, lower interest, and softer prices, all factors that make homeownership more achievable.
Ready to make a move? REMAX is here to guide you, every step of the way.
