Single-family homes, not condos are ‘prime beneficiary’ of HST rebate

Sales of new single-family homes in the Toronto region in July reached the highest level in five years, with buyers taking advantage of the 13-per-cent HST rebate.

The tax break has been in effect for four months and houses and townhouses have been the main draw, not newly built condos as the Ontario and federal governments had intended.

The two levels of government implemented the temporary policy to help developers get rid of unsold condo inventory and revive the home-building industry.

But so far, it has mostly spurred sales of single-family homes, which include detached and semi-detached houses and townhouses but not stacked townhomes.

There were 781 transactions of new single-family homes last month, according to a report by the Building Industry and Land Development Association (BILD), a trade group.

Here’s how buyers of new Ontario homes can put HST rebates toward mortgage qualification

That was 50 per cent above the 10-year average for July and the highest volume for that month since 2021 when there were 831 purchases, according to the report, which used Altus Group data.

In comparison, there were 237 sales of preconstruction or newly built condos in July. That was higher than the same month last year but 80 per cent below the 10-year average for July.

Under the HST policy, which expires at the end of March, buyers can get a tax rebate of up to $130,000 on new homes priced up to $1.5-million.

“The prime beneficiary has been single-family homes and townhomes,” said Michael Waters, the chief executive of Minto Group, which has launched two single-family and townhome projects in the province since the rebate went into effect in April.

Minto also launched additional single-family home projects at two of its existing development sites.

HST rebate propels new single-family home sales in Ontario, but not condos

Last month’s activity mirrored the trend that has taken place across Ontario since the rebate went into effect.

Over April, May and June, single-family homes accounted for 86 per cent of sales, according to a previous report provided by BILD. Meanwhile, new condos made up 14 per cent of the purchases in that period.

Although demand for condos is slow, BILD CEO Dave Wilkes said developers have told him that some of their unsold inventory is starting to sell.

As of the end of July, there were 12,345 unsold condos in the Toronto region that were either under construction, preconstruction or newly built and sitting empty. That represents two-thirds of the total unsold inventory of new homes, according to Altus estimates.

The oversupply has attracted large investors, which have been acquiring unsold units in bulk from developers at deep discounts. However, their purchases have not made a significant dent in the unsold inventory.