Fall economic statement is another self-inflicted housing wound

By Richard Lyall

Nov. 3, 2026

Ontario's Fall Economic Statement (FES) had one job when it came to housing: keep buyers in the market while a fragile new-home sector tries to find its footing. Instead, it confirmed that the enhanced HST rebate on new homes will end as scheduled on March 31, 2027. It also confirmed that the province is going ahead with eliminating the existing new housing rebate for purchases made after that date. For most buyers who are not first-time purchasers, the result is a sharp drop; from full HST relief on homes up to $1 million to no provincial rebate at all.

That is a remarkable choice given where Ontario stands. Sales taxes, development charges and other government levies on new homes here remain far higher than in virtually any other North American jurisdiction. British Columbia is the only real competitor. A buyer in the GTA pays a stack of taxes and fees that would be unthinkable in Calgary. The enhanced rebate was one of the few measures that meaningfully narrowed that gap. Letting it lapse puts the full burden back on the purchaser just as the market needs every bit of support it can get.

The program was billed as a one-year window, but the procedural regulations, CRA guidance and forms needed to claim the rebate arrived months late. Builders and buyers lost a significant share of the program's life waiting for the rules. High-rise projects need presales to secure financing and typically take years to move from launch to construction. They were never going to fit neatly inside a 12-month window in the first place. Ending the rebate in March means it was never given a fair chance.

Then there is the proposed increase in penalties for first-time buyers. The statement would raise the penalty for false or misleading statements on the land transfer tax refund for first-time homebuyers from $4,000 to $10,000. That refund has been in place for years. The statement lists the change as a technical integrity measure without pointing to any evidence that abuse has grown. Nobody defends fraud, but the timing is telling. The province is getting tougher on first-time buyers while its own HST relief has been slow to reach them. Late regulations and forms held up those rebates for months. That is a separate problem, and one of the government's own making. Raising the stakes for buyers while that delivery failure goes unaddressed looks gratuitous.

The bigger issue is what the end of the enhanced rebate will do to supply. Our recent research indicates that discontinuing the rebate will almost certainly reduce new-home sales and, in turn, housing starts. Fewer presales means fewer projects reach financing and fewer homes get built. It also means less government revenue, not more. A home that is never sold generates no HST, no land transfer tax, no development charges and no construction employment. The expiry may be booked as a saving, but the lost activity is a real cost.

Of note, the province’s FES recognizes the dire state of the residential housing market, as Land Transfer Tax revenue is expected to decline by $497 million to $3.28 billion for the 2026-27 fiscal year. This recognition clearly undermines any argument that the government can make to remove initiatives that are ostensibly supposed to support homebuyers.

The pattern is frustrating. Governments set ambitious housing targets, introduce a measure that works, deliver it late, and then withdraw it before it can do its job. The FES is another self-inflicted housing wound.

RESCON will continue to make the case, with our industry and labour partners, for extending the enhanced rebate with eligibility timelines that reflect how high-rise housing is financed and built. We will also keep pressing for durable reform of the taxes and levies that make Ontario one of the most expensive places on the continent to build a new home. We remain ready to work with the province and the federal government to get this right. Ontario's buyers, and the homes we need, depend on it.