St. John’s housing prices up: report

Daniel MacEachern
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Housing prices in St. John’s rose between 5.2 and 7.5 per cent year over year in July, according to a new report from Royal LePage.

The survey and market forecast, released Tuesday, reported detached bungalows rising 5.2 per cent to about $290,000, two-storey homes rising 6.8 per cent to $393,000, and condos experiencing the biggest gains, climbing 7.5 per cent to $309,000.

St. John’s Royal LePage agent Glenn Larkin said the housing market faltered earlier in the year, but a lack of inventory, combined with activity from executive home buyers and people trading up from smaller homes, helped push prices up despite many first-time buyers either opting out of the market or buying lower-priced homes thanks to tighter mortgage rules introduced last year by the federal government.

“Compared to Canada, (St. John’s) is one of the highest parts of the country,” said Larkin. “We’ve seen a demand on certain categories of homes, and condominiums got the biggest increase, because any new condos to come to market are more expensive. More expensive to build, and more expensive because of the demand.”

And a year after tighter mortgage rules were implemented — which effectively made it more difficult for first-time buyers to qualify for mortgages, and reduced the amount eligible buyers did qualify for — first-time buyers are creeping back into the market, either because another year has provided them with a larger down payment or more demonstrated job longevity, said Larkin.

And buyers have become increasingly interested in homes with apartments to rent out to defray mortgage costs.

“What wasn’t in demand for a few years, because you didn’t need the apartment to qualify for your mortgage, has started to creep back in to the marketplace,” said Larkin.

Mortgage broker Ian Murray of the Mortgage Centre in St. John’s says some of the city’s market quirks have kept prices buoyant despite the loss of — by his estimate — 15 per cent of buyers priced out by the tighter mortgage rules.

“We’ve got at least a few different things happening in our marketplace that isn’t happing in Nova Scotia or New Brunswick,” he said. “We still have a lot of baby boomers, and even their parents, who for years lived out of St. John’s, the metropolitan area, and because they’re getting closer to retirement age, they want to be closer to kids, grandkids and the medical profession. So they’re moving from, for example, Twillingate, into St. John’s.”

In addition to that demand, the province’s strong trades sector is providing the workforce with more money — and more important, strong long-term employment — to put into housing, creating demand.

“We’re also seeing a small influx of non-nationals, people immigrating to Canada, and getting landed-immigrant status and starting to buy houses,” said Murray.

The Royal LePage report also forecasts housing prices will rise another two to three per cent by the end of the year, although Murray notes that predictions of rising prices from real-estate firms can be self-serving and intended to spur demand from people who think they should buy now before prices get even higher.

“I look at it from the other side,” he said.

“In four weeks, we’ve watched the discounted five-year mortgage rate jump 50 basis points. That’s the biggest jump I’ve seen in a long time. Will it go down? Look into your crystal ball and guess, because your guess is as good as mine.”

Twitter: @TelegramDaniel

Organizations: Royal LePage, Royal LePage.The, Mortgage Centre

Geographic location: Canada, Nova Scotia, New Brunswick

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Recent comments

  • A Stupid Man
    July 10, 2013 - 22:25

    What are hire rents exactly? Not from Sin Jawns are ya bye.

  • Turry from town
    July 10, 2013 - 15:34

    Thanks for letting us know how much house prices have gone up.Like the fox telling you how many hens are in the henhouse.As the economy keeps moving along and demand outweighs supply these people(realeestate agents and developers and trades companies) jack up the prices to satisfy their greed. This is not supply and demand.It is demand and greed.

  • P F Murphy
    July 10, 2013 - 11:08

    Housing prices aren't up. The current market has merely excluded most low end purchasers and when you have few or no low end purchasers, your average will be higher since there are few or no low numbers to bring it down. The headline is a shill for good feelings and an adrenalin rush to buy something, anything now before the price goes even higher. In actuality, the prices have probably gone down due to fewer purchasers and longer wait times to sell so better opportunities for buyers to under-offer significantly on their purchases and save a bunch of money which includes their fees to real estate agents.

    • PouchCov
      July 10, 2013 - 13:28

      Just to clarify your comment above in regards to buyers. They DO NOT pay real estate agents any commission or fess for services rendered!

    • Adam
      July 10, 2013 - 15:27

      @PouchCov: Without a buyer, there is no sale from which to pay a commission. Just because a buyer does not cut a cheque directly to the real estate agency/brokerage does not mean they are not the one paying the commission.

    • Pouchcov
      July 11, 2013 - 21:33

      @Adam the vendor(owner) is the only person who pays both the listing and buyers agent the commission. My statement was that buyers do not incur any real estate fees in terms of paying the agents commissions directly. They have lawyer, home inspection and moving costs but not commission fees.

    • JohnnyT
      July 12, 2013 - 06:04

      2008 - House 'A' sells for $400k (Realtor takes 5% commision = $20k) 2010 - House 'A' sells again but in order for the buyer to get back what they paid they will have to tack on the realtor fees again so the selling price now becomes $400k + 5% Realtors fees ($21k) = $421k 2012 - House 'A' sells yet again but in order for the buyer to get back what they paid they will have to tack on the realtor fees again so the selling price now becomes $421k + 5% Realtors fees ($22k) = $443k

  • a business man
    July 10, 2013 - 07:22

    Music to my years. I paid off my rental properties years ago, so the increase in value is a windfall for me, as is the hire rents that I am able to charge. Pretty good for a side business. Hoprefully the prices continue to up until the end of time.

    • Brad
      July 10, 2013 - 11:31

      "What goes up, must come down, spinning wheel got to go round". Either you are a troll, or didn't pay attention or your economics classes did you?

    • a business man
      July 10, 2013 - 20:16

      Of course the house prices will come down. It is the typical boom them bust cycle. I am fully aware that the house prices will drop, and I plan and selling half of my rental properties when we start seeing the signs of the crash. Then, when the prices are lower, I will buy the same number of house and repeat the cycle. The key is to buy low, sell high, and rent in between. The take the profits and enjoy. You should try it.

    • Brad
      July 11, 2013 - 19:42

      Yea, but in other posts, you are hoping house prices go up forever, which won't happen. So which is it? Your logic, especially for an alleged "lawyer", as you claim, is shockingly lacking.