Ontario says more than half of first-time homebuyers will pay no land transfer tax on their first home starting in the new year.

Facing calls to address soaring home prices and strained affordability, the province is targeting the rebates it gives those first-time buyers.

Currently, the province refunds a maximum of $2,000 in land transfer taxes to first-timers.

Starting January 1, the cap on the rebate doubles to $4,000.

That means an Ontario resident buying a home for $368,000 or less would pay no land transfer tax to the province.

To fund the move, the province is raising the land transfer tax rate on homes over $2 million, from two per cent to 2.5 per cent -- also effective January 1.

While the rebate cap is being doubled, the average home price in several Ontario cities is far above the $368,000 threshold to avoid paying any land transfer taxes.

In the Greater Toronto Area, the average home price has soared 21 per cent to $762,975 in the past year.

In Hamilton, it's up 19.8 per cent to $535,520 and in Barrie that average home price has soared 24 per cent to $476,668.

The province collects more than $2 billion annually from the land transfer tax, more than tobacco, beer and wine combined.