HST hike not deal breaker for car, home buyers, sellers say

The two per cent hike in HST coming Friday will increase the cost of big ticket items, but a St. John's car dealer and a city real estate agent both say it won't be a deal breaker.

"It's been pretty busy for the last couple of weeks. People want to get ahead of the taxes." said Keith Tibbs, who runs Keith Tibbs Used Auto Sales on Topsail Road.

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Tibbs told the St. John's Morning Show on Wednesday that he's on the lower end of the market so he may not be feeling the pinch the way new car dealers are. But he said he won't lose a deal over two per cent.

"Two percentage points on $10,000 works out to roughly $200. It's a lot of money I guess, over time, but over a five-year finance contract you're probably looking at four or five dollars a month," he said.

"We'd do what we can to negotiate deals with our customers."

Tibbs said his sales are up at least five per cent over last year, and much better than in the 1990s.

Bigger bite for real estate

The jump in HST from 13 to 15 per cent will mean a bigger bite for home buyers — an extra $4,000 on a $200,000 purchase — and real estate agent John Riche said it applies to new homes or heavily renovated ones.

However, he thinks the potential buyer will look more at whether they can afford the monthly payment.

"When you're buying a house, you don't just look at that two per cent and say that's the final factor in my decision … it's the total that's considered," said Riche.

Sometime even that extra $10 a month can knock them out of the buying process.- John Riche

"New homes are doing quite well. Of course, it's that price point now that's below 350 [thousand dollars] as opposed to the price point that was above 350 in the past 10 years."

Riche said if mortgage payments are around the same cost as renting, then buying a home is a "no brainer."

But he agreed that the higher taxes may make a difference for people who have trouble qualifying for a mortgage.

"Sometime even that extra $10 a month can knock them out of the buying process."

With construction materials also being taxed at a higher rate, builders will also take a hit, Riche acknowledged.

"Especially on the spec homes," — those that are built without a predetermined buyer, he said.

Low interest rates, he said, may be the saving grace.

"The stats are saying that we're doing OK. Oil collapsed last year and everybody thought uh oh, real estate is gonna collapse," said Riche.

"It didn't. It stayed quite level, even went up one percent in certain places."