The Liberal government’s planned removal of the GST for first-time homebuyers could have the unintended effect of leading to higher prices for new homes, according to an economic analysis by Desjardins.
The government has introduced legislation eliminating the GST on new homes valued up to $1 million and reducing the GST on new homes between $1 million and $1.5 million, building on a promise the party made during the last election campaign.
The report by Desjardins economist Kari Norman says builders may push up prices to cover higher materials and labour costs, with an assumption that the overall housing price would still be lower due to the GST removal….