Low interest, high confidence drive housing demand

Staff ~ The Telegram
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High consumer confidence and low interest rates boosted housing prices in St. John’s this year, according to a new report from Royal LePage. — Telegram file photo

A survey released Thursday by Royal LePage says high consumer confidence coupled with low interest rates helped drive St. John’s-area housing prices up in 2011.

The report says the average price for a detached bungalow increased 7.8 per cent to $257,333. For a two-storey house the average price rose 4.8 per cent to $343,500, and for condos it went up 4.9 per cent to $268,000. Those figures, however, don’t represent the average price of all sales in the area; rather, Royal LePage determines fair market value for the different types of dwellings in different regions — the St. John’s area has been divided into the west, the east end and Mount Pearl — and averages the prices in each category.

Royal LePage estimated the price of the three types of houses in all three regions rose between 4.5 and five per cent, with the exception of detached bungalows in the east end; Royal LePage says a representative bungalow in the east end rose 14 per cent over last year.

In a statement released by Royal LePage, Phil Soper, Royal LePage’s president of real estate services, said his company expects slower price growth — 2.8 per cent nationally — by the end of 2012.

“In the recovery period following the 2008-2009 recession, I found myself repeatedly speaking of ‘irrational exuberance’ in the Canadian housing market,” said Soper in the statement. “Expectations were too high and the pace of expansion unsustainable. With this report, I find myself in exactly the opposite position. Widespread calls for a major real estate correction in 2012 simply can’t be justified. The industry has significant momentum entering the year, and is buoyed by the stimulative effect of very low interest rates; we expect the market to continue to expand — albeit at a slower pace.”


Organizations: Royal LePage

Geographic location: Mount Pearl

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Recent comments

  • David
    January 20, 2012 - 17:59

    If either of the last two posters had any insight or perspective on the actual formulas on how and what a realtor makes as a fee, and how completely unjustified and antiquated (and outrageously lucrative) those formulas are in determining the price for a realtor's service they would be embarrassed to tears for defending them and their ilk. Seriously...you don't need much math skills to identify the critical flaws in the fee structure --- even someone from St. John's could figure it out if they tried. But it is pure laziness and ignorance of basic finance by "clients" like these that allows mostly incompetent, used car salesmen to sell houses many of them shouldn't even be permitted to enter. And they put a LOT of legal and marketing resources into lobbying and protecting their billion dollar cartel. For all that "Occupy" BS, bankers are underpaid altruists compared to realtors.

    January 18, 2012 - 19:07

    Real Estate agents are not incompetent, they are licenced and regulated and certified. The too take a cut, but they are also responsbile for facilitating the transaction of a major asset. They are just salespeople, and it is not like anyone is prevented from becoming an agent. I am happy with the increase in housing prices across the courtry. My properties have increased significantly in value. My US, properties, not so much, But my Canadian properties have done great. We certainly have more than people who cannot afford to buy and home owners who have escalated property taxes because of the artificial value put on homes because there has to be someone to buy the homes at the higher prices. The market dictates the price, it is basic supply and demand. Land is limited, so buy lots of land and wait for it to jump in value. As long as people still buy houses, one cannot say that there isn't anyone who can afford to buy.

  • Cheyenne
    January 17, 2012 - 17:27

    I am neither a real estate agent or a home builder. I am a real estate investor and I analyze real estate market conditions to invest accordingly. For the folks blaming RE agents and Home Builders for increased prices... Real Estate is actually a market of supply and demand. As demand increases (more buyers than sellers), competition for the number of houses available drives the price higher. Corrections (reduced prices, or non-increasing prices) are driven by markets where there are more sellers than buyers... Buyers have more choices in this circumstance and sellers have no choice but be more competitive with prices in order to sell their properties. Real Estate agents determine house prices by reviewing comparable properties that have recently sold. Home Builders sell homes based on 'market value', usually by enlisting the help of a Real Estate agent as described in the previous sentence. I personally feel sympathy for individuals and families struggling to purchase their first home due to increased prices. However, lets place the onus where it belongs... The increase in house prices is a by-product of a booming economy that is attracting new people to St. John's, increasing the number of house buyers, creating competition for the homes that exist. We have to acknowledge that on top of the supply and demand nature of real estate (describd above), current interest rates are at record lows and is a factor in spurring increased house prices. This is a result of government policy to encourage a continued strong economy. The money-making question is... How long will this continue?

  • David
    January 13, 2012 - 13:38

    Another 'objective' assessment of things from the RE pimps...nice work, Telegram. Perhaps tomorrow we'll have a review of the justice system by a panel of prisoners. BTW, 'correction' is the term the RE pimps coined to make a very expensive mistake sound like an orderly, predictable, healthy occurrence. They are shysters, making an undeserved living by inserting themselves as incompetent middle-men who take a 'cut' off the top of a highly leveraged transaction. .....all possible without even a high school diploma.....

  • Pop
    January 13, 2012 - 11:22

    Should be interesting to see what happens when interest rates jump a up a few points. Should be able to get a home pretty cheap then. Buyer beware.

  • turry from town
    January 13, 2012 - 10:24

    Greedy realestate agents and home builders have driven the cost of housing through the roof.What we have left are people who cannot afford to buy and home owners who have escalated property taxes because of the artificial value put on homes.Why do you publish reports from realestates companies?It's like asking the fox about the henhouse.

  • Townie
    January 13, 2012 - 07:07

    Wow! And Pam still maintains that journalists are professionals. How wrong she is! And this includes all media in Canada.

    • Awayboy
      January 13, 2012 - 08:20

      Don't believe a word they say. The Bubble has burst in St. john's. NOV/DEC more listed then sold. If you go on MLS inventory is building. I just sold two houses in Stjohn's and had to take a lost. Bought both of them 1 and half years ago. Like the article says these numbers are based on Market value (real estate dreams) and not actually numbers.