Written by: Zak Khan of REW The policy has implications for agents, Homeseekers and the market as a whole. With the Canadian Federal Election set for 28 April 2025, we’re examining the major parties’ housing announcements. Each party has their own plans for what they would do in the housing realm if elected, so keep an eye out for our articles breaking down their announcements on The Guide. Prime Minister Mark Carney announced on 20 March 2025 that the Government of Canada will no longer charge the goods and services tax (GST) on purchases of newly built homes less than $1 million for first-time buyers. This promise can only be put into practice after the next federal election if the Liberal party is elected to govern. The elimination of the GST will potentially lead to savings of up to $50,000 on the purchase of a new home. In BC, the current median home price currently hovers near $1 million, and in Greater Vancouver it is over $1 million. It is possible to find newly built condos for less than $1 million in Greater Vancouver, but far more difficult to find new townhomes below this threshold, while there are likely no new detached homes available below $1 million in the Metro Vancouver area. Real estate advisor Manraj Dosanjh at Dexter Realty, who specializes in new construction homes, thinks that, “This is a great step toward making ownership more affordable for those looking to get their foot in the market, as the 5% GST is seen as a financial barrier for would-be buyers of new construction homes.” This move would make it more affordable for first-time buyers to enter the housing market, but it may also drive up demand and therefore prices. Similarly, it may spur construction if demand increases, but it may also lead to a loss of tax revenue, causing a cutback in services or infrastructure spending. But Dosanjh also says that the policy could go further: “However, I believe that in order for the government to spark real activity in the new home market and increase the supply of much-needed housing, the elimination of the GST should be extended to all purchasers, including investors.” According to Dosanjh, pre-sale condos require buyers to make a purchase on a home that is set to complete two to five years later. Because of this dynamic, Dosanjh says, “it's mom-and-pop investors who are most likely to initially purchase pre-sales, making them an integral part of the puzzle in helping the developer meet their financing requirements to begin construction. This is especially crucial in the country's fastest-growing metros, where new housing starts are plummeting.”

Carney says the Federal Government will get back into building homes.

Carney further clarified his housing policies 31 March 2025. This included pledging to have the Federal Government directly involved in building homes via the Build Canada Homes (BCH) Federal entity. This entity would build affordable homes, including on public land, stimulate the new homes industry and provide financing to home builders of affordable housing, according to the plan. Canada’s Federal Government once had a similar program that was cut in 1993. It began after World War II in response to a housing shortage and was called the Wartime Housing Corporation, which became the Canada Mortgage and Housing Corporation (CMHC). BCH would act as a developer doing the land acquisition, management and planning of affordable homes, but private builders would do the actual construction as part of partnerships. All Federal affordable housing initiatives would fall under the BCH, transferring the Affordable Housing Fund and Federal Lands Initiative to its control. Carney says that using this approach would prompt demand for Canada’s building materials and construction industries. The Liberal housing plan also pledges to reintroduce a rental building tax incentive originally enacted in the 1970s. That was called the Multiple Unit Rental Building incentive, and lasted for seven years. It prompted the building of almost 200,000 rental units, but saw criticism because it did not require a minimum number of affordable units and claims that it acted as a tax shelter for investors. The Liberal Leader also says he aims to speed up construction by making public municipalities' progress in meeting their Housing Accelerator Fund commitments. He plans to streamline inspections and regulations and simplify the building code. As a result of these pledges, Carney claims that he will cut red tape and development hurdles to enable the construction of nearly 500,000 homes per year. If you’re considering purchasing a newly built home after this announcement, remember that the policy still has yet to be implemented. In the meantime, you can speak to a real estate agent and mortgage advisor for more guidance.