The Canadian real estate market dipped across the country in June — but not in Newfoundland.
Across the country, according to figures released Monday by the Canadian Real Estate Association, there were 4.4 per cent fewer houses sold last month than there were in June 2011, with the average price of a home — $369,339 — down 0.8 per cent from the year before. But in Newfoundland and Labrador, the number of housing sales was up 64.7 per cent from the same month the year before, from 340 in June 2011 to 560 last month. The average housing price went up 3.6 per cent, from $255,815 in June last year to $265,051 in June this year.
In St. John’s, the numbers were even stronger — 237 houses sold last month, a 75.6 per cent increase from last year’s 157 June sales. The average price over the same time frame went up 6.7 per cent, from $281,114 to $299,836. The price of single-detached homes went up 14.3 per cent, from $297,650 to $340,073.
Gregory Klump, chief economist for the association, noted national trends shouldn’t be mistaken for local ones — housing prices went up in many of the country’s major markets, but a large decline in Vancouver — a drop of 13 per cent in housing prices — skewed the national average.
“I’m guessing that folks in St. John’s are still very upbeat about the economy,” said Klump. “Still very enamoured with buying a home while interest rates are low. I’m guessing that consumer confidence is still quite high.”
Klump said he expects housing sales to slow in July and August, in the wake of tighter mortgage rules that went into effect July 9. In previous years, he said, the market would see a spate of buying from the time new mortage rules were announced to the time they took effect, but this time there was only
2 1/2 weeks from announcement to implementation, giving buyers little time to respond.
“We didn’t see a rush of buyers come into the market before the most recent changes to mortgage regulations took effect, because there was so very little time to react,” he said, adding that buyers, according to a recent study, also weren’t aware of the changes, such as dropping the maximum amortization period from 30 years to 25 years.
“We do anticipate that what’s going to happen in July is sales will decline, because a lot of first-time buyers won’t be able to qualify for mortgage-default insurance.
“We do expect sales will soften, but not significantly, and I don’t expect them really to have much effect at all on average price, because if people are not forced to sell they’re not going to take a discounted price if they don’t have to. What normally takes it on the chin at this part of the market cycle, particularly when mortgage regulations are tightened up, is that sales activity declines.”