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.”