Quote:
Originally Posted by theman23
Interesting difference between the CPC and LPC GST cut from new home construction:
The CPC would cut it for all new construction.
The LPC would cut it for new construction purchased by first time home buyers.
Not sure which policy is the better one. Two of the more reasonable personalities that I follow and find credible on social media seem to have contrasting opinions on this as well.
Mike Moffatt seems to think the LPC plan would drive demand without increasing supply, whereas Jon Pasalis seems happier with the LPC plan arguing that it will be more likely to force developers to start selling product that actually appeals to the end use instead of the real estate investor.
Explains a lot.
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I suspect that the CPC plan would have the price difference just eaten up by the developers and not make a significant dent in housing affordability. The market is priced to what people can afford in theory, after all, and cutting the GST doesn't really change that equation. Targeting first-time home buyers, however, will limit the ability for developers to eat up the difference as they would then be pricing out other buyers.
I suppose that does lend credibility to Mike Moffatt's argument. A cut in GST for all new construction would massively incentivize construction as the margin would go up considerably. Arguably, overall housing prices should come down as well for non-new build housing.
Jon Pasalis is also right. A lot of new build construction on the lower end of the market is targeted toward investment buyers and is not really suited to new homeowners. The CPC plan would likely only exacerbate this issue, especially as we look at a possible recession where investors would be ready to snap up a relatively safe bargain. Is a tonne of new supply that is eaten up by investors going to help? But will the LPC plan add enough supply?
It's not at all clear to me.