Mark Carney’s government launches a support package for first-time homebuyers in 2026, offering tax incentives, increased RRSP limits, and longer mortgage terms. These measures aim to reduce the down payment and monthly payments, but experts doubt they will solve the systemic affordability crisis.
New tax breaks
The cancellation of GST (Goods and Services Tax) for new builds costing up to $1 million promises savings of up to $50,000 for first-time buyers. The limit for the Home Buyer’s Plan (HBP) will increase from $35,000 to $60,000, allowing more funds to be withdrawn from RRSPs tax-free. A 30-year amortization rule for insured mortgages on new builds is already in effect instead of the previous 25 years.
Market reaction
Royal LePage CEO Phil Soper sees the incentives as a motivation for those who are “on the fence”: as prices stabilize, the measures will encourage purchases. Pine CEO Justin Herlick welcomes the breaks for new builds but notes the increasing average age of first-time owners — the market has become unaffordable for young families.
Limitations of the measures
Experts agree: without an increase in supply, the incentives are a band-aid on a wound. The price-to-income ratio is rising: the average home price is $690,000 (over $1 million in the GTA), and incomes are not keeping pace. Soper warns: as the market exits the downturn, the incentives will ignite demand, accelerating price growth.
Construction as the key
Carney’s government has created the Build Canada Homes agency and allocated $25 billion over 5 years to accelerate construction, including affordable and modular housing. CMHC estimates the need for 430,000 to 480,000 units annually to return to 2019 affordability levels. The Parliamentary Budget Office criticizes the lack of a plan regarding housing types.
Prospects for buyers
The measures will help those close to the market but will not solve the problem for the majority. Canada remains one of the most unaffordable countries for housing: prices are rising faster than wages, supply is lagging, and demographics exacerbate the shortage. Without a construction boom, the incentives will only delay the crisis.
