Condo and office towers in downtown Vancouver.DARRYL DYCK/The Canadian Press
The federal government’s GST rebate for first-time buyers of newly built homes will do little to revive the decimated condo market, homebuilders say.
Sales of preconstruction homes have plummeted across the country with scant demand in Toronto, Hamilton, Vancouver, Calgary, Edmonton and Montreal.
Builders say eliminating the 5-per-cent goods and services tax (GST) for newly built homes will entice some first-time buyers to make a purchase, but will not be enough to boost the overall market.
The tax break became law mid-March and applies retroactively to purchases made after March 19, 2025, and before 2031. It provides up to $50,000 in a GST rebate on newly built homes priced up to $1-million, while homes priced up to $1.5-million receive a partial GST break.
“It is not going to help the condo business at all,” said Jeff Paikin, president and co-founder of New Horizon Development Group, which has been building homes in Southern Ontario for more than three decades.
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A main reason for that is because first-time buyers are not the primary purchasers of preconstruction condos, which are mostly sold to investors.
This is key because developers typically need to sell about 70 per cent of their units before a lender will provide the financing to start construction.
“Can I get two-thirds of that building sold out with first-timers?” said Steve Stipsits, president and owner of Branthaven Homes, which has been building homes in Southern Ontario for more than 50 years. “In my experience, that’s just never gonna happen,” he said.
Mr. Paikin agreed. “That’s just an unrealistic expectation in the marketplace today,” he said.
They both estimate that first-time buyers accounted for less than 5 per cent of their overall sales before the downturn.
In the greater Hamilton area where Branthaven and New Horizon develop homes, preconstruction condo sales fell 64 per cent from 2024 to 2025 and were 86 per cent below the 10-year average, according to data from real estate consultants Altus Group.
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In the Toronto region, preconstruction condo sales were 89 per cent lower than the 10-year average and in the Vancouver region, they were 74 per cent lower, according to Altus.
In Calgary and Edmonton, they were below the 10-year average by 54 per cent and 68 per cent, respectively. In Montreal, they were 70 per cent lower.
Altus research manager Edward Jegg said many first-time buyers purchase resale homes, not preconstruction.
And although the price of a preconstruction condo has dropped over the past few years, they are generally more expensive than those on the resale market.
For example, in the Toronto region, the average asking price for a preconstruction condo was $1,380 per square foot in the last quarter of 2025, according to research firm Urbanation Inc. That means a 600-square-foot condo would cost about $828,000.
In comparison, the average price of a resale condo in the Toronto region was $652,945, according to a Toronto Regional Real Estate Board report.
“There is a glut of resale condominium apartment units on the market acting as direct competition to new units,” Mr. Jegg said.
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However, for new condos that are near or below market rates, the tax break is expected to help.
“It just removed one more barrier,” said Neil Chrystal, chief executive officer of Polygon Realty Ltd., which started selling a condo project in Coquitlam, B.C., just days after the rebate became law.
The project has two-bedroom units starting at $599,900 and one-bedrooms starting at $499,900, according to its website. That is below the typical condo price of $671,000 in that area, according to Greater Vancouver Realtors data. It is also lower than preconstruction prices of a few years ago.
In one day, Polygon sold 31 of the 94 units, and Mr. Chrystal said over half of those purchasing units were first-time buyers.
“We had pretty strong sales in a market that’s been very difficult,” he said. “I think it is going to have a very positive outcome for first-time buyers who have been maybe waiting on the sidelines.”
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Mr. Chrystal credits Polygon’s competitive pricing and the fact that the project was already under construction so buyers could see the building was coming. Unlike traditional condo financing, Polygon secured financing before meeting the 70-per-cent threshold.
The new law will also benefit Habitat for Humanity Canada, which helps lower-income Canadians buy homes. “Having the GST removed is a huge incentive for those of us who are building affordable homes,” said Pedro Barata, the charity’s chief executive officer.
Condo experts agree that it will help first-time buyers who are highly price-sensitive.
“First-time buyers are more skewed to the most affordable price points,” said Pauline Lierman, a vice-president of market research at Zonda Home, an industry research company.
As the condo market struggles, developers have urged Ottawa to offer the tax break to all buyers, although it is unclear if that would be enough to bring investors back.
Meanwhile, developers have cut staff, postponed projects and tried to retool their business.
New Horizon’s Mr. Paikin said he had to turn his condo project in Oakville into a rental-only building. His work force has been cut by 70 per cent to 35 employees. Branthaven’s business used to be two-thirds condo development and one-third houses. Today, it is only low-rise properties and Mr. Stipsits had to lay off two-thirds of his staff.
Mr. Stipsits said the GST rebate may allow him to build a few houses that he wouldn’t have otherwise sold. “But on high-rise condo, it doesn’t do all that much,” he said.