Are Houses in St. John’s Still Cheap?

The St. John’s real estate market had been one of the cheapest places in the Canadian housing sector. This had even been the case in early 2022. However, as more people relocated to Atlantic Canada, creating a situation of lower inventories, the attractive prices that have been prevalent for years have slowly disappeared.

In fact, according to a recent study, St. John’s was just one of three Canadian housing markets not to record price declines.

The upward trajectory of home prices in St. John’s will likely persist in 2024, says a new report from RE/MAX. The Housing Market Outlook report suggests a three per cent increase in the average sales price in St. John’s as sales activity is projected to slide two per cent. Still, it is expected to be in a balanced market in the coming year.

But what does St. John’s look like today? Let’s take a look at the current state of the St. John’s real estate market.

Are Houses for Sale in St. John’s Still Affordable?

According to the Newfoundland and Labrador Association of REALTORS® (NLAR), the overall Home Price Index (HPI) composite benchmark price for homes in St. John’s climbed more than four per cent year-over-year in December, topping $335,000.

Additionally, here is a breakdown of what benchmark prices look like for various residential property categories in St. John’s:

• Single-Family: +4.3 per cent to $347,00
• Townhome: +7.2 per cent to $275,600
• Apartment: +4.7 per cent $238,400

The notable increase in St. John’s home prices occurred as residential sales activity tumbled more than 17 per cent on an annualized basis. Moreover, single detached home sales declined 31.3 per cent year-over-year to finish 2023.

Compared to the rest of the Newfoundland and Labrador housing market, home prices were up more than three per cent to just below $290,000. Home sales fell 14 per cent year-over-year, totalling 398 units.

What to Expect in the St. John’s Housing Market in 2024

So, what should buyers and sellers anticipate for the St. John’s real estate market in 2024?

Local housing industry experts say that semi-detached properties and apartment homes are likely to record the highest demand in 2024. At the same time, low inventory volumes are resulting in the move-up contingent of the housing market to refrain from listing residential properties, which could affect supply for first-time homebuyers.

Additionally, on the supply front, greater immigration levels into Newfoundland and Labrador could further exacerbate tight supply issues, especially as the provincial population is at its highest level in nearly 30 years.

“High interest rates have deeply impacted our market, especially in the first-time buyer’s segment. We’re seeing fewer and fewer first-time buyers as a result to rising rates and costs,” said Jim Burton, the owner of RE/MAX Infinity, in a report. “On the other hand, our limited inventory is impacting the move-up buyers segment, with many refraining from listing their property because when they want to buy, there’s not much to choose from. This, of course, trickles down to the first-time buyers segment, causing stagnation in the market.”

New construction activity trends could be mixed in the upcoming year. While St. John’s is seeing the construction of apartment properties, duplexes, and single-detached homes, high interest rates and the growing cost of labour and materials are impacting construction.

It has been noted that builders are constructing fewer speculative properties – speculation on demand for the residential property once construction is completed – due to higher interest rates.

Recent Canada Mortgage and Housing Corporation (CMHC) data shows a slowdown in new housing construction levels. The numbers highlight that housing starts tumbled 23 per cent in the first 11 months of 2023, totalling 405 units.

Meanwhile, the top three neighbourhoods believed to be in high demand are Paradise, Conception Bay South, and Southlands.

More Housing Opportunities in Atlantic Canada?

The Atlantic Canada real estate market presents a plethora of housing opportunities in 2024. In New Brunswick, the average sales price in Fredericton and Saint John are projected to be around $332,000 and $318,000, respectively. Over in Moncton, prices are forecast to climb to about $350,000.

A lack of supply will continue to be the dominant theme for local markets in Atlantic Canada, forcing prospective homebuyers to expand their search, the RE/MAX report stated:

“Current economic conditions and ongoing affordability challenges have led first-time homebuyers in particular to expand their home-buying search to include semi-detached homes or properties with rental income potential.”

Interest rates and immigration will be the other factors to influence prices in St. John’s and beyond.