New home builders have cut back on the production of new homes in the wake of the global financial crisis, but have reactivated building permits last year only to be met with one more homebuyer resistance factor.
The new HST tax on new homes may not affect low priced homes as much due to rebates being offered, but on the higher end homes, the full burdon of the HST plus LLT or land transfer tax packs a big wallup.
This tax may have price so called “home-flippers” out of the market. These speculators created a liquid market for real estate by buying homes and reselling them over time to willing buyers. Many times these speculators also invested in upgrading the home over the standard builder fixtures.
One thing is for certain, a million dollar home may cost as much as an additional 10% in order to buy new. This will artificially put pressure on new home prices and may give a slight lift to preowned homes.
How it plays out over the next year remains to be seen, but levying a full tax on new homes cannot be a good thing for new home construction in Ontario.
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