What Drives the Price | Why New Costs More
Why a brand new home costs more
Four things separate a new home from an older one on price, and only one of them is the building. Here is each of them with a number attached.
The short answer
A new home costs more than an older one for four measurable reasons: GST at 5% applies to it, it is built to the current building code, it carries the BC 2-5-10 home warranty, and it has no deferred repairs. On the regional median of $1,346,450 the GST alone is $67,323. Against that, the newly built home property transfer tax exemption can be worth up to $20,000.
- GST rate
- 5%
- GST on the median
- $67,323
- Warranty
- 2-5-10 years
- Listings stating GST is extra
- 971
1. GST applies, and it is not small
A used residential home is exempt from GST. A newly built one is not. At 5% on the regional median of $1,346,450, that is $67,323 before anything else happens.
Nearly every listing in this dataset states the price without it. 971 of 1,394 say GST is not included, and 382 say nothing either way, which is a question to ask before you write an offer rather than after.
The GST new housing rebate can reduce the amount on qualifying purchases. Eligibility depends on the price and on your circumstances, so confirm it with the Canada Revenue Agency or your lawyer instead of assuming it.
On a $1,346,450 newly built home
| List price | $1,346,450 |
|---|---|
| GST at 5% Before any rebate you may qualify for. | $67,323 |
| Property transfer tax Full tax would be $24,929. The newly built home exemption does not reach this price. | $24,929 |
| Before legal fees and adjustments | $1,438,702 |
2, 3, and 4: what the premium actually buys
| A home built in the last two years | An older home | |
|---|---|---|
| Home warranty | BC 2-5-10 warranty: two years labour and materials, five years envelope, ten years structure | None, once the original warranty period has passed |
| Building code | Built to the code in force now, including current energy and seismic requirements | Built to the code of its own era, which may be decades old |
| Deferred repairs | Roof, windows, plumbing, and heating are all at the start of their life | Each system is somewhere in its life, and the roof is the expensive one |
| Heating and energy | Built to current BC energy standards, which shows up in the monthly bill | Depends entirely on when it was built and what has been upgraded since |
| GST | 5%, normally on top of the list price | Not payable on a used residential home |
| Property transfer tax | Fully exempt at or below $1,100,000 if you move in and stay a year | Payable in full, unless the first-time buyer exemption applies |
When the premium is worth paying
Works well if
- ✓ You do not want a renovation project, or the capital and time one needs
- ✓ The home is at or under the newly built home tax exemption threshold, which offsets part of the GST
- ✓ You value having a warranty behind the envelope and the structure
- ✓ Long-term running cost matters to you, and current energy standards are worth real money each month
Does not work if
- ✕ You are stretching to the limit of what you can borrow, since GST comes out of cash rather than the mortgage
- ✕ You want a specific established street where nothing new is being built
- ✕ You would rather buy an older home cheaper and improve it on your own schedule
Check before you offer
- → Whether the list price includes GST, in writing, before you offer
- → Whether you qualify for the GST new housing rebate
- → The home and the builder on the BC Housing new homes registry, so the warranty is confirmed not assumed
- → That you can meet the 92 day occupancy condition if you are relying on the tax exemption
Common questions
Do you pay GST on a new home in BC?
Yes. GST at 5% applies to a newly built home and is normally added on top of the list price. Of the 1,394 active listings in this dataset, 971 state GST is not included, 41 state it is, and 382 do not say. Always confirm which applies in the contract. GST does not apply to a used residential home.
What is the 2-5-10 warranty?
It is the minimum home warranty insurance required on a new home in BC: two years on labour and materials, five years on the building envelope, and ten years on the structure. A resale home older than that carries no warranty at all. You can confirm a specific home and builder on the BC Housing new homes registry.
Does the tax exemption cancel out the GST?
Not entirely, but it offsets a real amount. On a home at or below $1,100,000 the newly built home exemption removes the whole property transfer tax bill, worth $20,000 at that price. The GST is a larger number, though a rebate may reduce it on qualifying purchases.
Is a new home actually worth the premium?
That depends on what the alternative needs doing. A new home has no roof, windows, plumbing, or heating system approaching end of life, and it is built to current energy standards, which shows up in the monthly heating bill. An older home may cost less on the day you buy it and considerably more over the following decade.
Why does this page not show a new versus resale price gap?
Because our data covers only homes built in the last two years, so it contains no resale figure to compare against. Publishing a number we cannot measure would make the rest of these pages less trustworthy. What we can measure and do publish is what the premium pays for.
Where these figures come from
- VanPlex active listings, MLS® data
Active townhouses, half duplexes, and row houses built in the last two years across Metro Vancouver and the Fraser Valley.
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- Canada Revenue Agency, GST/HST new housing rebate
GST applies to new homes. The rebate reduces it on qualifying purchases.
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- Government of BC, newly built home PTT exemption
Full exemption at $1,100,000 or less, partial to $1,150,000. Effective 1 April 2024.
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- Government of BC, property transfer tax rates
1% to $200,000, 2% to $2M, 3% above $2M, plus a further 2% on residential value above $3M.
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- BC Housing, new homes registry and warranty
Confirms a builder's licence and a home's 2-5-10 warranty coverage.
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See the homes behind these numbers
Every figure on this page comes from listings you can open. Search the full set of newly built townhouses, half duplexes, and row houses, and filter by price, bedrooms, freehold or strata, pets, and parking.