New for less?

Resale homes in Canada are exempt from GST and HST. New homes are not. For as long as the HST has existed, a buyer choosing between a new house and a resale house across the street has faced a tax gap: 13 per cent of the price in Ontario, less a provincial rebate capped at $24,000. On a $999,000 home that gap was $105,870 — money that went to government and not into the house.

On April 1, 2026, Ontario and Ottawa closed most of that gap for every buyer of a new principal residence, not just first-time buyers. The Ontario Enhanced New Housing Rebate relieves the full 8 per cent provincial portion up to $1 million; the Ontario New Home Affordability Payment covers the 5 per cent federal portion. Between $1 million and $1.5 million the combined relief is a flat $130,000. Both depend on one date: the agreement of purchase and sale must be signed by March 31, 2027. Construction has to start by the end of 2028 and be substantially complete by the end of 2031, so a buyer signing today can still close in 2027 or 2028.

One correction to a common claim: the “close before 2029” rule people repeat belongs to the separate rental rebate (completion by December 31, 2029), not to homes bought to live in.

Economists expect a price cut on one product to raise its sales. That part worked. GTA single-family new-home sales went from a record low in 2025 to five straight months above their 10-year average. July’s 781 sales were 3.5 times July 2025 and August’s 692 were 3.8 times the August 2025 figure first reported. Condos, which mostly miss the price cap and timing rules, rose only 40 to 50 per cent.

Resale did not share in it. TRREB sales were down 0.9 per cent in July and 2.1 per cent in August. That contrast is the core of this report. The buyers who came back to the market this spring did not spread evenly across products. The subsidy steered them toward the one product that got cheaper.

Two caveats keep this honest. First, a large share of the year-over-year jump is base effect, because 2025 was the worst year for GTA new-home sales on record. Second, the comparison with the 10-year average is the cleaner test, and it still shows sales running 21 to 50 per cent above normal in a market where resale is doing no better than flat.

Keswick is the largest community in the Town of Georgina; Queensville, Sharon and Holland Landing are in the Town of East Gwillimbury. TRREB reports both towns separately, and both have something most of the GTA doesn’t: large, active subdivisions selling ground-oriented new homes a short drive from the resale stock. If new homes pull buyers away from resale anywhere, it should show up here.

Resale sales are down in both towns this year: 401 in Georgina from January to August (−11.1 per cent) and 273 in East Gwillimbury (−8.1 per cent), while York Region as a whole rose 5.6 per cent. But the timing doesn’t fit a simple story that the rebate emptied the resale market. The steepest declines came before April: Georgina was down 37 per cent year over year in the first quarter. From April to August, resale sales were roughly flat in both towns — while York Region rose 9.9 per cent. The rebate didn’t knock local resale volume down. It appears to have kept these towns from sharing in the region’s spring recovery.

Inventory tells the rest. Georgina has 404 active resale listings and 6.3 months of inventory, up from 5.3; East Gwillimbury sits at 5.4 months. Both are deeper into buyer’s-market territory than York Region (5.0) or the TRREB area (4.6).

When two goods are substitutes, a subsidy on one shows up in the other’s price as much as in its sales. That is where the local data is clearest. From March to August 2026, the resale benchmark fell 6.1 per cent in East Gwillimbury and 4.9 per cent in Georgina, against 2.1 per cent for York Region and 1.7 per cent for the TRREB area. Over the same five months of 2025, the pattern was reversed: both towns beat the region by about four points.

Put those two years side by side and you get a simple difference-in-differences: after April 2026, East Gwillimbury swung 8.0 points and Georgina 7.1 points against York Region, relative to the prior year. That is not proof of cause. The towns are small, benchmark models get revised, and other things changed in 2026. But it is the pattern you would expect if a newly subsidized substitute were pulling price-sensitive buyers out of these two towns’ resale markets.

New-home prices did not rise to absorb the subsidy. The GTA single-family benchmark fell 14.6 per cent year over year to $1,248,866 in August. Part of that is mix: builders are releasing smaller homes that fit under the $1 million line. But the direction matters. Sales rose and list prices fell at the same time, which only happens when there is supply on the shelf to sell.

This is the comparison buyers actually make. On one side, current builder prices for homes in Keswick, Queensville, Sharon and Holland Landing, adjusted to what an eligible buyer pays if they sign inside the window. On the other, what resale homes in the same town sold for from January to August, and TRREB’s August benchmark for a typical home.

Builders now show prices two ways, which makes naive comparisons wrong. Some list the HST-inclusive sticker and credit the rebate at closing; others now list the price with the rebate already taken off. Treasure Hill’s Georgina View towns and Aspen Ridge’s Queensville singles are the second kind — their new prices match the rebate formula to the dollar. Where a builder doesn’t say, the charts show a range: the sticker if it is already net, and the rebate-adjusted price if it is gross. That keeps the comparison conservative.

Keswick: new freehold towns at $543,000 to $670,000 after the rebate are below the Georgina resale townhouse average of $686,783, and they are 1,205 to 2,410 square feet. New 32- to 36-foot detached homes land between $729,000 and $923,000, around the resale detached average of $850,219. Queensville: Aspen Ridge’s singles at $1.09 to $1.19 million after the rebate bracket the East Gwillimbury resale detached average of $1,137,506. New towns in Queensville and Holland Landing are 3 to 20 per cent above the resale townhouse average; the smaller Sharon Village towns come in below it.

A new home isn’t always the cheaper choice, and it isn’t the same product. Resale buys a mature lot, trees, a finished street and usually a faster close. New buys a Tarion warranty, lower near-term maintenance, a current building code and, in these towns, more floor area per dollar. The point is narrower and more useful: in 2026, for many Keswick and Queensville buyers, the new home is no longer the premium option.

Substitutes and cross-price effects. A young family choosing a three-bedroom house in Keswick is comparing the resale semi on an established street with the new town in Simcoe Landing. When the effective price of the new home falls by up to 13 per cent, some of those buyers switch. The resale seller now competes against a cheaper alternative and has to meet it on price, wait longer or withdraw. In the data that looks like fewer resale sales than the region, more listings and weaker benchmarks in the two towns with the most new supply.

Who keeps the subsidy. Tax-incidence theory says the side of the market that can adjust quantity more easily keeps less of a subsidy. Builders came into 2026 with 38.5 months of GTA new-home inventory and unsold singles in these very subdivisions, so their supply was elastic: they could sell more homes without raising prices. That is why the subsidy has mostly reached buyers. Across 768 GTHA floorplans, cuts outnumbered raises almost three to one, and only 3 of 72 increases exceeded the tax benefit. Regal Crest’s Simcoe Landing plans are 19 to 27 per cent cheaper than in mid-2025.

Why new homes cost more to begin with. A resale home carries no development charges and no HST. A new single-detached home in East Gwillimbury carries $153,353 in development charges alone, and about $131,446 in Keswick. Before April, a repeat buyer of a $999,000 new home there paid about $259,000 in combined government charges; inside the window it is the development charges alone. The rebate doesn’t make new homes cheap. It removes the part of the premium that was pure tax.

Demand pulled forward. A subsidy with an end date moves purchases forward in time. For a repeat buyer of a $1.2 million new home, net HST drops from $132,000 to $26,000 on April 1, 2026 and returns to $132,000 on April 1, 2027. Expect a rush of signings into March 2027 and a gap afterwards, unless the window is extended. No extension has been announced. Resale sellers in these towns are competing against a subsidy for the next six months, then against the hangover.

Deposits and Tarion. Deposits here range from $60,000 to $200,000. Tarion protects freehold deposits up to 10 per cent of the price, to a maximum of $100,000. For agreements signed since April 1, 2026, full coverage requires the buyer to notify Tarion within 45 days of signing. Several Queensville and Holland Landing projects ask for more than the cap.

Appraisal and closing. A home bought in 2026 for a 2028 closing is appraised at closing. If resale prices keep drifting down, the lender may value it below the contract price, and the buyer covers the difference. Closing adjustments — Tarion enrolment, utility meters, any development-charge increases listed in Schedule B — add to the price, and there is no legal cap on the total beyond disclosure. Delayed-closing compensation is capped at $7,500.

Supply after 2027. East Gwillimbury started 1,322 homes in 2017 and 22 from January to August 2026. Georgina started 412 in 2023 and 59 so far this year. Today’s buyers are absorbing homes planned years ago. With starts this low, the new-home discount may not last beyond the inventory that already exists.