Hurdling the HST Barrier

Principal Consultant , David Allison Inc.
  • Aug. 16, 2010

Before that pesky HST came in on July 1st in BC and Ontario, we in the real estate community hummed and hawed about the effect it would have on home buying. And let’s be honest, no one really had an answer – we still don’t.

But I can tell you this. This combined federal and provincial sales tax is a real psychological barrier not easily jumped over.

I am in the process of looking for a new condo right now and that darned HST keeps toying with me.

I thought I had found the perfect place. It had high ceilings, polished concrete floors, and hit every item on my checklist of must-haves. Best of all, the list price was bang on the money – before the added HST that is. An additional 7 per cent on top of the previous 5 later, and I suddenly found myself in an entirely new purchase bracket (insert caricature of David Allison with jaw dropped here) one that didn’t quite fit.

It’s not just a bit of a bump.

It’s a price migration into an entirely new category.

I quickly realized that, when it comes to buying new, I need to shop one price category below what I can afford. This is a major psychological barrier. New = less home, while used = more home. Which one will I choose?

I am still not sure in the long run how HST will affect our markets and our profits. But having experienced the impact of the HST first-hand as a consumer, I can say in full confidence that some form of damage control needs to take place.

How can we mitigate this mental block?

The fact of the matter is, most items still cost exactly the same as they did before. That pair of shoes that seem such a bargain at $100 still cost $100 plus tax. GST plus PST equals HST. It’s the same amount.

Here’s the rub: when it comes to the bigger and scarier purchase of buying a home, developers have to contend with the fact that they are now dealing with an additional 7 to 8 per cent, which is enough to push folks toward homes they either cannot afford or homes that are slightly less than what they thought they deserved.

So, I am throwing this out to you.

A month in, what are those of you in BC and Ontario doing? Any ideas from a psychological perspective? Any ideas on the sales floor? How are sales teams being coached to deal with this when talking to potential homebuyers? Any suggestions?



David Allison works with executive teams in real estate development and other industries to craft the early-stage vision and brand for projects of all kinds. He crystallizes the most interesting…

Read more

David Allison works with executive teams in real estate development and other industries to craft the early-stage vision and brand for projects of all kinds. He crystallizes the most interesting…

Read more




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