Ontario’s temporary harmonized sales tax (HST) reduction has brought parts of the new real estate market to a halt, but Toronto condos are still on hold.
For the first time in three years, single-family home sales rose above the historical average in April. However, condominium prices remained near record lows, according to data released on Wednesday by the Construction Industry and Property Development Association (BILD) and Altus Group.
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 housing sales accounted for 901 of those sales, 21 percent above the long-term average, and condo sales totaled 199 units, 88 percent below historical norms.
“There hasn’t been a lot of response from buyers to this program,” Edward Jegg, research manager at Altus Group, said of the discount during a condominium market webinar accompanying the release.
Instead, Jegg explained that the strongest response to the rebate was seen in cheaper, land-oriented housing types such as terraced condominiums.
“This discount flipped the script, and now it’s the low-rise building 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 home market,” he said.
According to BILD, the HST relief program and pent-up demand created during the housing market downturn have helped homebuyers return to the low-rise housing segment.
The association also noted significant improvements in affordability before the rebate took effect.
“Prices are down about 20 to 25 percent from the peak in 2022, and then there’s another 13 percent on top of that (HST savings),” said Justin Sherwood, BILD’s chief operating officer.
In March, Ontario Premier Doug Ford and Premier Mark Carney announced that all home buyers can now qualify for a one-year exemption from the HST on newly built homes valued at $1 million or less, with partial rebates for higher-priced homes.
Although the provincial aspect of the bill was passed in the budget, the federal bill has only passed first reading – meaning full implementation of the HST rebate is still incomplete.
BILD said “more clarity” on how to get the discount was urgently needed to stimulate further activity.
Still, the condominium market remained crowded with inventory and weak investor demand in the first month of the stimulus rollout, which began April 1 and runs through March 31, 2027.
BILD recorded 13,331 units of unsold inventory in April, of which 4,757 units were in construction projects, 6,259 units were in projects under construction and 2,315 units were in completed buildings.
Jegg said institutional investors have begun to step in, noting that 29 units near Toronto Metropolitan University were acquired as part of a larger mass acquisition expected to total 300 rental units.
“Further bulk purchases are expected to be completed in May and June,” he said.
• Email: shcampbell@postmedia.com