The housing market throughout much of Atlantic Canada is poised for solid growth 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 a report released today by RE/MAX of Ontario-Atlantic Canada Region.
The RE/MAX Atlantic Canada Market Report examined residential real estate trends and developments across 15 markets for the first quarter of 2019, and compared them to the same period one year earlier. The markets surveyed were: St. John’s (CMA), Deer Lake/Corner Brook, and Clarenville (including the surrounding areas) in Newfoundland and Labrador; Halifax-Dartmouth, the Annapolis Valley/Yarmouth, Kings County, Truro and Cape Breton in Nova Scotia; Charlottetown and Summerside in Prince Edward Island; and Saint John, Miramichi/Miramichi Rural, and Greater Moncton in New Brunswick.
The report found strong momentum in the larger urban centres, as well as spillover in 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.
Consumer confidence is on the upswing in Atlantic Canada and that is translating into stronger home-buying activity in residential real estate markets. First-time buyers – many of whom are Millennials – are behind the push for housing, with many seeking to capitalize on the low interest rate environment along with provincial government assistance programs before values climb. –Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada Region
Assistance programs introduced by provincial governments in Atlantic Canada in an effort to support home ownership are no doubt behind the surge in first-time homeowners. Targeting first-time buyers, these programs range from repayable loans of up to 40 per cent for an existing home (New Brunswick’s Home Ownership Program) to government grants of $3,000 for qualifying individuals or families (Newfoundland and Labrador’s Home Purchase Program). Also making home ownership more attractive, the federal government recently announced changes to its existing Home Buyer’s Plan, allowing first-time buyers to withdraw $35,000 (up from $25,000) from their Registered Retirement Savings Plans to finance the purchase of a home. The federal budget also included a proposed Canada Mortgage and Housing Corp. (CMHC) equity loan designed to provide financing of up to 10 per cent on new homes and five per cent on existing homes.
Larger Atlantic centres were first to respond to the stimulus and demand for affordably priced homes continues to build. St. John’s, Saint John, Greater Moncton and Halifax-Dartmouth all reported year-to-date sales for the first quarter of 2019 were on par or ahead of 2018 levels. The situation in Charlottetown was somewhat different, with exceptionally tight market conditions responsible for fewer sales in the first three months of the year. The ripple effect is spreading to smaller centres in PEI, placing pressure on both inventory and values.
Supply issues were reported in 80 per cent of markets surveyed, with starter homes at affordable price points being most sought-after. This was especially so in areas that have a price ceiling associated with home-ownership assistance programs. An example would be in Nova Scotia, where the province will provide down-payment assistance for first-time buyers who qualify on homes valued at up to $150,000 outside of Halifax-Dartmouth and up to $280,000 within the Halifax Region Municipality.
“These programs are breathing new life into smaller communities, and demand has outpaced supply, leaving realtors scrambling to find new listings for their clients,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada Region. “In some cases, first-time buyers are vying against out-of-province buyers for product.”
Population growth has also factored into the mix, with immigration and in-migration having an impact on housing across Atlantic Canada. According to Statistics Canada 2016 Census Profiles, 10 out of the 15 markets RE/MAX examined are experiencing an increase in local population. Nowhere is the uptick more evident than in Prince Edward Island, where inventory has fallen to its lowest level since 2003.
“The Atlantic Region traditionally has the highest rates of home ownership in the country and we don’t expect that to change anytime soon,” explains Alexander. “Greater economic prosperity (the Maritimes are expected to lead the country in GDP growth in 2019), combined with interest rate stability and first-time buyer incentives are tipping the scales in favour of home ownership yet again.”
Lastly, the landscape has changed for homebuyers in Atlantic Canada. Millennials now represent approximately one in five residents in major centres such as St. John’s, Moncton, Saint John, Charlottetown, and Halifax-Dartmouth. Given that statistic, Alexander says “you can bet this trend with continue for the remainder of the year and beyond.”