In a move described as making new housing more affordable, the provincial government has announced that new homes under $750,000 will now be exempt from property transfer tax. Meaning that new home buyers will save up to $13,000 on the purchase of their new home.
That loud percussive noise you heard yesterday was developers clapping at the extra cash they’re going to make by adjusting their prices accordingly. It’s built into buyers budgets, why would they leave it on the table? Sure it may provide a bit of an incentive on the supply side to bring more new property to the market at or below the threshold price, but current market conditions hardly require supply side encouragement, and outside the lower mainland I would think that the vast majority of new builds come in well under the threshold.
So why the move? It’s another way for the government to be able to say they are doing something about affordable housing. Without actually making anything more affordable. And reducing government revenues at the same time.
Let’s be clear here, I dislike the PTT in a very big way, it should have been indexed and it is an impediment to real estate transactions. But given that the vast majority of real estate sales are not new homes but rather resale homes, the primary beneficiary of this policy change will be developers. There is no way that this will equate to any real savings on home buyers parts, as it will be put back into pricing and increase the profit margins for the builders. A change in PTT policy on resale homes would have had a real effect and is where the government should have acted.
If they really wanted to fund social housing programs, which is the “affordable” business the government should be in, as opposed to making all housing more “affordable” to the detriment of homeowners everywhere, then they could have simply earmarked all the PTT collected from new homes to go into a social housing fund-social housing funding problem solved.