GST rebate helps first-time homebuyers answer affordability question

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The dream of owning a first home seems more out of reach these days. The onus of coming up with a down payment, the seemingly ever-increasing home prices — not to mention the uncertainty brought about by the trade war with the United States — the challenge of it all seems more daunting than ever.

But the recently-enacted federal GST rebate program for first-time homebuyers seems to be making some headway to make the homeowning dream a little more achievable.

Anushka Panagar, and her partner, Priyank Prajapati, were able to make the dream work for them as they move into their first home in Canada, and they say the federal GST rebate program has helped ease budget concerns immensely. The rebate program provides a savings of up to $50,000 for a new home under $1 million, with a prorated amount for homes up to $1.5 million.

The couple moved to Calgary from Winnipeg four years ago. Working in IT, both were able to establish careers in the field in the city and now felt it was time to get out of the rental market.

“Family is important to us, and we wanted to build a home that would answer our multi-generational needs,” Anushka tells Postmedia, and they found the five-bedroom, 2,673-square-foot Springhill model from Trico Homes in the southwest community of Creekview.

“We loved the layout, it was perfect for our needs,” she says. “My parents will be living with us, and having the main floor bedroom was important for us. Also, having a view of the green hills behind us was just so calming and peaceful, I could sit and just look at it the whole day,” she adds.

The couple, who took possession of their home last month, were already in the process of buying their new-build home when the GST rebate program became law in March and it definitely helped ease the stress of the situation.

“We were unsure at first if the GST rebate discount was going to be applied on the purchase price or given to us after the purchase, and it wasn’t until some two weeks before closing that we got clarity on it. In our case, Trico agreed to take the discount off from the purchase price,” Priyank says.

“But honestly, either way would have worked for us. We just wanted to own our first home in Canada,” he adds. “It was a long and complicated procedure, but we are so happy everything worked out,” Anushka says.

The homebuilding industry had welcomed the federal GST rebate program for first-time homebuyers when it came out this year, and early indications have been positive.

“There’s no formal, publicly tracked data on applicants, so we can’t say with certainty how many Albertans have used it,” says Scott Fash, CEO of BILD Alberta.

“Anecdotally, our members report the program is being well utilized and is making a meaningful difference for buyers, though the initial rollout took longer than we would have preferred.”

Fash did add that BILD Alberta, the voice of the homebuilding and land development industry in the province, would have preferred a more extensive program that included more than just first-time buyers.

“We welcome any measure that helps ease Alberta’s housing affordability crunch, but this alone won’t solve the province’s housing supply challenge. It’s one piece of a much bigger puzzle,” Fash says.

“A more direct fix would be to stop taxing new home construction altogether, or at minimum extend this rebate to all buyers of new homes, not just first-time buyers, who make up only about five per cent of the market.”

Generally, though, homebuilders have been encouraged by the program, and they are seeing a sales bump directly from it.

“It was a slow start, as there was some confusion with the information coming from the government,” says Glenda Schwartz, marketing director at Trico Homes. “We consulted with our lawyers to make sure we fully understood the program and how it would work for our buyers. Overall, now that we have more clarity, the program has been working well.” She says approximately 22 per cent of their deals year-to-date came directly from this program, including those of Anushka and Priyank.

Pamela Burns, director of sales and marketing at Sterling Homes, also views the rollout of the program as successful.

“The initiative has helped improve affordability for first-time homebuyers and enabled more people to achieve their milestone goal of owning their first home. For some customers, the rebate has made purchasing a home possible; for others, it has allowed them to consider a larger, upgraded or otherwise more suitable home than they may previously have been able to afford.”

Burns says that it was important for them as a builder to support buyers by providing information about the rebate program to supplement what the government already had.

“The federal government’s website outlines the program’s eligibility requirements and parameters. Customers are responsible for reviewing those requirements and confirming that they qualify, as reflected in their purchase contracts. Sterling supports buyers by providing information and directing them to the appropriate government resources so they can make informed decisions and understand the program’s requirements.”

She says since the program was introduced in March, approximately 15 per cent of Sterling’s home sales have involved customers taking advantage of the rebate. “Many of these have been applied to single family homes, seeing many customers who were renting or living with family able to make home ownership possible.”

Cantiro, which builds homes in both Calgary and Edmonton, thinks more needs to be done.

“The GST rebate can lower the purchase price by tens of thousands of dollars for eligible first-time buyers. That is especially meaningful in Edmonton, where buyers still have access to a broad range of new housing types and price points,” says Chris Ongkiko, sales manager for Cantiro. “It strengthens an affordability advantage the region already has, but buyers still need to solve for the down payment, mortgage qualification and sustainable monthly costs.”

He says the rebate is actively showing up in first-time buyer conversations and purchases at Cantiro. “The bigger story is Edmonton itself: buyers have meaningful choice, including townhomes and other attainable new-home options. The rebate makes that value proposition stronger, while financing and monthly affordability remain the ultimate test.”

Fash agrees. “Real, lasting affordability gains will come from tackling the other cost drivers: slow permitting timelines, red tape and constantly shifting approval processes. Every one of these adds time and cost to a new home long before a buyer ever sees the benefit of this rebate.”