St. John’s Real Estate Sees 244% Equity Gains Over 30 Years Amid Economic Growth

Homebuying activity in St. John’s and the surrounding areas continued to fire on all cylinders this year, despite inventory levels that fell well short of demand. While conditions have moderated in recent weeks as the outcome of fall provincial and municipal elections weigh on market activity, once elections have taken place, the market is expected to rattle and hum once again.

The surge in demand — set in motion during the pandemic and reinforced by capital works projects and population growth — continues to drive both resale and rental activity to unprecedented levels. As a result, average price and rental rates have accelerated, creating affordability issues in a city and province that has typically boasted the highest home ownership rates in the country. In 2021, 69.4 per cent of those in the St. John’s CMA were homeowners, according to Statistics Canada, well ahead of the Canadian average of 66 per cent during the same period. While values are attractive compared to other major markets, affordability is a growing concern. St. John’s Real Estate Market Rises 244% Over 30 Years Amid Economic Growth. As of now, the population of Newfoundland and Labrador stands at approximately 545,464, marking the highest figure since January 1998. Immigration and in-migration from more rural areas is changing the landscape, breathing new life into the region.

With a growing buyer pool and given the current strength of the housing market, younger buyers are becoming increasingly frustrated. Limited inventory, stagnant interest rates, and rapidly rising values are challenging enough, but factor in the stress test qualification and home ownership becomes elusive. Buyers may lose out on seven to eight properties before achieving home ownership.

New construction is underway to help alleviate pressure but securing trades and independent sub-contractors can often prove an exercise in futility. There have been reports of some tradespeople including framers, drywallers, plumbers, etc. ghosting new homebuilders despite having a commitment. Given the compound challenges, supply shortages are expected to persist going forward.

Capital work projects, combined with investment in the province’s natural resources, have propelled economic growth in recent years. In its June 18^th Economic Forecast, the TD Bank expected Newfoundland-Labrador to record nation-leading expansion in 2025, citing oil and mineral production as the primary drivers. Resumption of oil production at White Rose is now officially underway, the first time since late-2023. Rising nickel production is expected to underpin the province’s mining industry, with the Vale Long Harbour Nickel Processing Plant, Vale’s Voisey Bay Mine, and projects by Iron Ore Company of Canada and the Tata Steel Mineral Canada Ltd. iron ore projects. Additional projects — including Fluorspar and Kami Iron Ore Project, the Rambler Copper Gold Program, the Bay du Nord and Lower Churchill energy projects, the Nalcor Electric Generating project and offshore petroleum operations including Hibernia, Hebron, Terra Nova, White Rose and Hibernia South — underscore the province’s resource-driven growth.

These economic factors and resulting employment gains, combined with relative affordability compared to other Canadian centres, will continue to drive population growth over the next 35 years. This is likely to create momentum like that experienced between 2004 and 2014 when average housing values climbed from $130,282 to $284,172 – a 118-per-cent increase providing a compounded rate of return over the 10-year period of 8.11 per cent.

St. John’s and its surrounding areas continue to demonstrate remarkable resilience and growth, driven by a combination of economic factors, population growth, and investment in capital projects and natural resources. Despite the challenges posed by limited inventory, rising prices and construction hurdles, the market remains robust, with demand for both sale and lease properties at unprecedented levels. While this dynamic environment presents both opportunities and challenges for buyers, sellers and investors alike, underscoring the need for strategic planning and adaptability in navigating the evolving landscape of St. John’s real estate, the momentum in the housing market is expected to persist.