Temporary HST rebates on new housing must be made permanent
By Richard Lyall
for Daily Commercial News
Sept. 14, 2026
Ontario's new homebuilding sector continues to contend with a challenging market environment unlike anything experienced in generations. Builders are navigating rising material and labour costs, cumbersome approvals processes, restrictive regulations and uncertain market conditions.
But there is one obstacle that has become impossible to ignore: government-imposed taxes, fees and levies that have turned the dream of home ownership into an increasingly unattainable goal for many Canadians.
As RESCON has long argued, taxes are one of the major drivers of housing costs. Research commissioned by RESCON and other industry organizations shows that government taxes, fees and charges now account for approximately 36 per cent of the cost of a new home.
That is an astonishing figure.
Imagine purchasing a home and discovering that more than one-third of the price is made up of government-imposed costs. No business sector could absorb burdens of that magnitude without consequences. Those consequences are now playing out across Ontario in the form of declining housing affordability, delayed projects, falling housing starts and thousands of young people questioning whether homeownership will ever be within their reach.
The numbers are troubling.
Twenty-five years ago, a typical Ontario home cost roughly three to four times a household's annual income. Today, that ratio is closer to seven to nine times income in many markets.
At the same time, wages have not kept pace. While house prices have more than doubled since 2005, inflation-adjusted wages have increased by only 16 per cent. In Ontario, the average income required to qualify for a mortgage is about $151,600, while average income sits closer to $60,800.
The result is predictable. Many millennials and members of Generation Z no longer believe homeownership is realistic. Others are leaving Ontario, or even Canada, in search of more affordable jurisdictions where the dream of owning a home remains achievable.
This should alarm policymakers. Housing is not a luxury good. It is a fundamental economic necessity.
That is why the recent decision by the federal and Ontario governments to introduce temporary HST relief on new homes was both welcome and encouraging. The rebates provide up to $130,000 in savings on qualifying purchases and have delivered exactly what affordability measures are supposed to do: stimulate activity and improve confidence.
During the first three months of the rebate program, which began April 1, Ontario recorded 8,410 new home sales, a 130-per-cent increase compared with the same period a year earlier when only 3,645 homes were sold.
The lesson could not be clearer. When governments reduce taxes on housing, more homes are sold and more projects move forward.
But while industry is grateful for the temporary HST reduction, the rebate arrived with significant challenges.
A delay of several months in releasing program rules, regulations and application details consumed valuable time and limited its effectiveness. Builders, developers and purchasers were left waiting for clarity while housing activity remained stalled. The impact was particularly severe for high-rise condo projects, where lengthy development and construction timelines make short-term policy measures largely ineffective.
RESCON believes there is a better path forward.
We are calling on all levels of government to implement permanent, predictable and functional long-term reforms. Chief among them is making HST relief permanent. Ideally, the tax should be withdrawn entirely from new home purchases. At a minimum, governments should fully restore and index the original GST rebate mechanism so that tax relief keeps pace with inflation and rising housing costs.
This is not simply a matter of helping builders. It is about helping families.
A recent Fraser Institute report highlights the growing burden taxes now place on Canadian households. Since 1961, the total tax bill of the average family has increased by 2,928 per cent, far outpacing increases in housing, food, clothing and overall inflation. In 2025, the average Canadian family spent 41.9 per cent of its income on taxes, compared with 36 per cent on basic necessities such as shelter, food and clothing combined.
Families are now spending more on taxes than on life's essential needs. Governments need to reconsider whether housing is the appropriate place to impose additional tax burdens.
Ontario remains far behind the pace required to meet its goal of building 1.5 million homes by 2031. Housing starts are falling short, multi-unit construction has weakened significantly and young people increasingly see little hope of owning a home.
If governments are serious about affordability and supply, they must move beyond temporary fixes. The evidence is already in front of us. Tax relief works. HST relief has helped get the market moving again. The challenge now is to ensure that momentum is not squandered.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.