While buyer’s market conditions prevailed in St. John’s in the first quarter, an increase in home sales in the first quarter of 2019 in indicating a seller’s market in the city and surrounding areas.
Overall, Atlantic Canada is poised for strong housing market performance in 2019 as economic performance ramps up, unemployment rates decline, and first-time buyer incentives at both provincial and federal government levels take hold, according to the RE/MAX 2019 Atlantic Canada Housing Market Report. The report found strong momentum in the larger urban centres, as well as spillover into several smaller markets. Home sales are on par or up in just under half the markets surveyed (7/15), likely due to the current shortage of inventory, while housing values have climbed in almost three-quarters (11/15) of the Atlantic Canadian markets surveyed.
Housing Activity in St. John’s
Three hundred and sixty-four properties were sold between January and March of this year, up almost three per cent from the 355 sales reported during the same period one year ago. Active listings also declined, down four per cent to 1,890 units in March, compared to the same period in 2018. With affordability an on-going concern in St. John’s, softer housing values may be the catalyst for an uptick in home-buying activity throughout the remainder of the year. Year-to-date average price hovers at $281,264, down about six per cent from $299,020 in Q1, 2018. Demand remains strongest in the $200,000 to $300,000 price range, with almost half of all sales occurring at that price point.
Millennials lead the charge for both new and resale properties in St. John’s to date, despite facing challenges in terms of the financial Stress Test. This segment of the market (between the ages of 20 and 34) represents 21.4 per cent of the population, according to the 2016 Statistics Canada Census Profile. With more stringent lending criteria in place, some first-time buyers have postponed the purchase of a home until they have a larger down payment, while others are moving to eliminate debt so that they have better Gross Debt Service Ratios (GDSR), and/or adjusting their expectations and lowering their price point. The provincial government intervened in 2018, allocating $1 million for a new Home Purchase program that provided 330 grants of $3,000 toward the down payment of newly constructed or existing new homes never sold or occupied, valued under $400,000 (including HST). They also replaced the former provincial Down Payment Assistance program with the First-Time Homebuyer’s Program that expired on March 31st of this year.
The Newfoundland government is expected to provide greater home ownership assistance when they table their budget in April. An ample supply of homes is available for sale throughout the city, but there are pockets where seller’s market conditions exist. One such market, Churchill Square, located in close proximity to Memorial University, has seen demand outpace supply this year. Properties that are priced right are often sold within days in Churchill Square, with many torn down to make room for new custom builds. Multiple offers are not out of the norm in the area. With Newfoundland’s economic engine forecast to gear up in 2019 — and GDP growth expected to lead the country at 2.3 per cent — there are many who believe the housing market has bottomed out. The outlook is bright for St. John’s and Newfoundland as a whole, with Husky’s White Rose expansion plan, Vale’s capital investment in Voisey Bay, and Scully Mines expected to create close to 1,750 new jobs in the province this year.
The recently announced $1 billion investment in jobs and skills training over the next six years in Newfoundland by the Federal Government should also bode well for the province’s housing markets. Against this backdrop, the number of homes sold in St. John’s is forecast to climb by year-end, with prices holding steady at 2018 levels.
Atlantic Canada Housing Market Highlights
- First-time buyers were a driving force in almost 70 per cent of markets surveyed. (10/15)
- Low inventory levels were reported in 80 per cent of markets. (12/15)
- Home sales were strongest at starter price points ranging from $100,000 to $300,000.
- Buyers from other parts of the country were active in 60 per cent of Atlantic Canada housing markets. (9/15)
- Newfoundland and Labrador and New Brunswick are seeing an influx of people returning home after working in Alberta’s oil sector.
- Luxury sales were up in Halifax-Dartmouth, Saint John and Kings County.