A temporary tax break is breathing new life into the Greater Toronto Area’s housing market, helping boost new home sales after months of sluggish activity. However, while demand for single-family homes has picked up sharply, the condominium sector continues to face significant headwinds, raising concerns about the pace of recovery in one of Canada’s largest housing markets.
According to the latest figures from the Building Industry and Land Development Association, more than 1,000 new homes were sold across the GTA in May, more than tripling the historically low sales recorded during the same month last year. The majority of those transactions involved low-rise homes, while sales of new condominiums remained weak.
Single-family homes once again outperformed historical averages, marking the second consecutive month of stronger-than-normal sales. The rebound follows the introduction of a temporary expansion of the HST rebate program announced by the federal and Ontario governments earlier this year. The measure allows buyers to receive rebates of up to $130,000, providing much-needed relief amid high housing costs.
Despite the improvement, overall new home sales remain far below long-term averages, largely because the condominium market continues to struggle. Industry experts say many potential buyers are still waiting for clearer guidelines on how the rebate program will be administered, while developers of high-rise projects face tight construction timelines that make it difficult for many condominium developments to qualify for the incentives.
The challenges facing the condo market are compounded by a large inventory of unsold units, limited new project launches and prices that appear to have stabilized at elevated levels. Only a handful of new condominium developments have entered the market this year, reflecting caution among developers and weaker demand from buyers.
The benchmark price of a new condominium apartment in the GTA remained just above the $1 million mark in May, suggesting prices have reached a floor despite slower sales. Meanwhile, the average price of new single-family homes declined compared with a year ago, offering buyers somewhat better value.
Industry leaders say the expanded HST rebate has provided a welcome boost to the market, but warn that clearer rules and more flexible eligibility requirements will be needed to sustain momentum and revive the struggling condominium sector. Until then, the GTA housing market is likely to remain a tale of two sectors—stronger demand for low-rise homes and continued uncertainty for high-rise developments.