Ottawa Market Report - GST credit just announced
This Week in the Market
This is probably the biggest news I’ve seen in the past few years and potentially even in the past decade when it comes to real estate.
The GST credit for first-time buyers purchasing new-build homes has officially received Royal Assent.
What this means is that if it’s your first time purchasing a property and you are buying a new-build home, you will now be eligible to save 5% off the purchase price through the federal GST rebate.
On top of that, Premier Doug Ford has previously stated that if the federal GST portion passed, Ontario would be willing to remove the provincial portion as well. If that happens, buyers could potentially see the full HST relief applied. Depending on the purchase price, that could mean savings of roughly 8–10%.
To put that into perspective, if you were purchasing a $700,000 new-build property, you would automatically save about 5% through the federal credit, with the potential to save an additional 3–4% if the provincial portion follows.
This is big news.
Whenever government incentives like this are introduced, they tend to stimulate demand very quickly. When the credit was first proposed last year we saw a noticeable spike in new-build activity in June, July and even the fall, and I suspect we’ll start seeing something very similar again over the next few weeks.
Builders have been sitting on quite a bit of inventory over the past year, but incentives like this typically get absorbed into pricing fairly quickly once demand returns.
My personal view is that the resale market will likely remain relatively soft this year, but the new-build segment may start to see a significant increase in activity.
If you’re a first-time buyer and have been considering a new build, this is definitely something worth looking at sooner rather than later.
If you’d like to understand what this could mean for you, or if you want to see which projects and opportunities might qualify, feel free to reach out anytime. I’m happy to walk you through the numbers and show you a few options that could make sense.
As always, if you have any questions about the market or real estate in general, just send me a message.
Construction Financing -
What Buyers need to know
For this week’s deep dive, we wanted to talk about those clients that want to build a home rather than buy a home. As we approach spring, we have been getting more questions about construction mortgages and how financing works. I thought it might be helpful to share a quick overview that you can pass along to any clients considering a custom build.
What Is a Construction Mortgage?
A construction mortgage—often called a progress draw mortgage—is designed to finance the building of a new home. Instead of receiving the full loan amount upfront, the funds are released in stages, known as draws, as the construction progresses.
Each draw corresponds to a certain percentage of the project being completed. Before funds are released, the lender typically requires a progress inspection by the original appraiserto confirm the stage of construction.
How Payments Work During Construction
One key difference with construction financing is that during the building phase, borrowers only pay interest on the funds that have been advanced so far. This interest is often deducted directly from the draw.
Once the final draw has been released and construction is complete, the mortgage converts to regular payments that include both principal and interest.
Holdbacks and Inspections
For each draw, lenders apply a 10% holdback, which is held in trust by the borrower’s lawyer. These funds are typically released about 60 days after occupancy, provided the home is substantially complete (generally at least 97%) and confirmed by the appraiser.
Clients will also need to ensure that:
All municipal building inspections are completed and approved
Builder’s Risk (All-Risk) Insuranceis in place for the entire construction period
Typical Construction Draw Schedule
While lenders can be flexible, most construction mortgages follow a schedule of four to five draws, often spaced about 45 days apart. These draws may cover key stages such as:
Equity in the lot
Foundation completion
Framing stage
Interior completion
Final completion
Builder Requirements
Lenders generally prefer borrowers to work with a qualified builder or licensed general contractor. A signed construction contract outlining the cost, timeline, and project scope is typically required.
For clients acting as owner-builders, lenders will often require detailed quotes for major components of the build, such as:
Foundation
Plumbing
Heating
Flooring
Other key construction elements
Why Early Mortgage Planning Matters
Construction financing involves more moving parts than a traditional mortgage, so getting the right structure in place early can make a big difference for clients planning to build.
If you have buyers considering purchasing land for a custom home or redevelopment project, we’d be happy to walk them through their options and help them understand what to expect from a financing perspective.
Here is alink to our guide to construction financingthat you can share with any clients looking to build that dream home.
Any rate changes have been updated below.
Some of the top rates that we are seeing today are:
Fixed
3-Year Fixed: 3.79% (less than 20% down payment)
4-Year Fixed: 3.84% (less than 20% down payment)
5-Year Fixed: 3.89% (less than 20% down payment)
5-Year Fixed: 4.09% (20% down payment or more)
5-Year Fixed: 3.94% (35% down payment or more)
Variable
5-Year Variable: 3.65% (less than 20% down payment)
5-Year Variable: 3.70% (20% down payment or more)
5-Year Variable: 3.70% (35% down payment or more)
Featured Homes of the Week
Handpicked properties worth your attention right now.
One of the Largest end unit townhomes
Closing this fall in Findlay Creek - 4 bedroom townhome larger than a lot of singles being offered - we're talking about 2400 sq ft with the finished basement open concept.
Full price is $737K but after the credits we're looking at a price of 667K for first time buyers. - Huge savings.
$667,000 • 4 Bed • 2.5 Bath • 2444 sq ft
New build within 15 minutes to downtown
Closing in 2027 - these are rare offerings as new builds tend to be more in the suburbs - this community is great for investing or for those looking for a more urban lifestyle. 15 minutes to downtown right by great bike and walking trails. Cash flow positive.
Starting in the mid $500's • 2 Bed • 1.5 Bath • 1500-1800 sq ft
Thinking About Your Next Move?
Whether you are buying, selling, or investing, our team at Gusinjac Group is here to guide you with local expertise and data-driven insight.
Request a Free Market Consultation
How we can help:
Tailored home searches based on your must-haves and budget
Strategic listing plans to help your property stand out
Investment analysis using a pro forma with rental and appreciation potential that is real and not hopeful
Ron Gusinjac
Realtor®,
Engel & Völkers Ottawa Central
