This year’s federal budget, while framed as a step toward improving housing attainability, ultimately leaves many hopeful homebuyers and the broader housing industry without the support they urgently need. The government’s decision to remove the GST for first-time homebuyers was presented as a meaningful affordability measure, but the reality is far less impactful. First-time buyers make up roughly five percent of the overall market. Offering relief to such a small segment will do little to stimulate new housing starts, save well paying jobs in the skilled trades or keep the residential construction industry afloat during one of its most severe downturns in decades.
If the goal is to get new homes built and meaningfully increase supply, the GST rebate must be broadened. Restricting it to first-time buyers overlooks the reality that many Canadians are currently living in homes that are either too big or too small for their needs, which creates bottlenecks throughout the housing continuum. Older adults who want to downsize, for example, are often unable to move because the financial penalties are simply too high. Expanding the GST exemption to all homebuyers, whether they are entering the market for the first time or moving to a more appropriate home, would free up much-needed family-sized housing and help restore balance across the market.
Young families are also being overlooked. Many Millennials and members of Gen Z entered the market by purchasing small condos, often the only homes they could afford at the time. Now, as they plan to start families, these households are ready to move into appropriately sized homes. Yet they receive no support under the current GST policy. These Canadians are not first-time buyers, but they are exactly the type of move-up buyers needed to keep the housing ladder functioning. When they cannot move, the entire system slows down.
At the same time, the residential construction industry is facing an unprecedented crisis. Well-paying, highly skilled jobs are being lost every week. Once these workers leave the industry, Canada risks losing them for good. When the market eventually rebounds, who will be left to build the homes governments continue to promise?
The federal government cannot allow this sector to shrink beyond recovery. It must step in with policies that stimulate housing starts now, not stand back with a wait and see approach. An across-the-board GST rebate would directly reduce costs, encourage new investment, and keep workers on the job during the downturn. It would also generate important downstream economic benefits such as supply-chain activity, employment and increased local spending. And the idea that broad GST relief would significantly reduce government revenue does not hold up, because when nothing is being built, there is no GST being collected anyway.
Canada needs policies that support the full housing continuum, not just a very small portion of it. A universal GST rebate for all new homebuyers would help free up inventory, support growing families, stabilize the construction workforce, and ensure that when demand returns, the capacity to build remains in place. The housing crisis calls for bold action, and partial measures will not be enough.
