Ontario Government Takes Step to Address Housing Affordability Crisis with Sales Tax Cut for First-Time Homebuyers

Strategic Insights -

As the housing market continues to grapple with affordability issues, the Ontario government has taken a significant step towards easing the burden on first-time homebuyers. The province has announced that it will cut sales taxes on new homes for first-time buyers, in a move that is expected to save them thousands of dollars. This initiative, combined with a similar federal measure, aims to provide relief to those who have been priced out of the market.

Key Takeaways:

  • The Ontario government has announced a plan to cut sales taxes on new homes for first-time buyers, aligning with a similar federal measure.
  • First-time buyers account for approximately 35% of new home purchases, but they have been disproportionately affected by the high housing-cost-to-income-ratio.
  • The current tax burden on new home purchases is 36%, with the majority of the cost attributed to taxes, fees, and levies.
  • The combined provincial and federal measures will save first-time homebuyers $130,000 on a $1-million home.
  • RESCON, the province's leading association of residential builders, will monitor the impact of these measures and continue to advocate for changes to address the root causes of the housing affordability crisis.
  • The housing market in Ontario is experiencing a 30-year low in housing starts and sales, with forecasts indicating continued weakness.

Statistics:

  • 36% of the cost of a new home is due to tax, fees, and levies.
  • First-time buyers account for approximately 35% of new home purchases.
  • The combined provincial and federal measures will save first-time homebuyers $130,000 on a $1-million home.
  • Housing starts in Toronto are at a 30-year low.
  • Sales have ground to a halt, with forecasts indicating continued weakness in the market.

Sources:

  • Globe Newswire (2025-10-28): "Governments of Canada and Ontario Unveil Plans to Boost Housing Affordability"
  • RESCON press release (2025-10-28): "Ontario Government Takes Step to Address Housing Affordability Crisis"