Income gaps widen in oil-rich St. John’s
Offshore oil and major construction projects have sparked an economic boom in St. John’s and other parts of Newfoundland and Labrador that has never been seen here before.
Beda Gautam sits with her mother-in-law Dhan Maya Adhikari and father-in-law Deo Narayan Adhikar in their basement apartment in St. John’s. They have been on the wait list for social housing for more than a year. — Photo by The Canadian Press
By Sue Bailey
THE CANADIAN PRESS—ST. JOHN’S
Housing prices have soared, wages are up, unemployment is down and restaurants and bars are among the country’s busiest. Once considered a fiscal basket case, this province leads economic growth forecasts this year as investors flock here.
“It has a lot to do with the oil boom, which is continuing,” said Al Stacey, president of the Newfoundland and Labrador Association of Realtors.
Houses valued five years ago at about $150,000 are selling for almost twice as much, while the typical price for a three-bedroom bungalow is now in the neighbourhood of $329,000 or higher, Stacey said.
In prime ocean-front enclaves just outside St. John’s, such as Conception Bay South, custom homes starting at $700,000 are the new normal, he added.
The latest numbers from Statistics Canada’s National Household Survey, released Wednesday, hint at the newfound prosperity.
In St. John’s, employment income comprised 78.2 per cent of total income in 2010 — a percentage that has the city rubbing elbows with high rollers like Calgary, Edmonton, Saskatoon and Regina.
The flip side of higher real estate values and escalating rents is a lack of affordable housing in St. John’s and other parts of the province. It’s an issue that affects not just low-income earners and seniors, but also workers earning good money, but not enough to save larger down payments required under tightened mortgage rules.
The NHS numbers illustrate the other side of the coin, too: employment insurance benefits still accounted for 6.1 per cent of total income in Newfoundland and Labrador in 2010, bringing the share of total income from government transfers in the province to 19.3 per cent, the highest in Canada.
The proportion of the province’s residents receiving employment insurance benefits was 23.6 per cent in 2010, with a median benefit of $7,900, compared with 10.3 per cent for all of Canada and its median benefit of $5,000.
“I really am concerned about the number of homeless people who may end up on the streets,” Stacey said. “Five or six years ago, if you were renting an apartment it would probably be $500 or $600. Now it’s $1,100 or $1,200 a month.”
Lois Berrigan, settlement services manager at the Association for New Canadians in St. John’s, said apartments are out of reach for single people earning up to $800 a month on social assistance. “They’re really struggling.”
It isn’t any easier for families trying to find two- or three-bedroom units that go for $850 to $1,700 a month.
Beda Gautam, 34, lives in a cramped three-bedroom basement apartment in St. John’s with her husband, their four-month-old daughter, his parents and his sister. It smells of mildew, drywall peels from water leaks in the ceiling and Gautam said she scrubs black stains with mould cleaner every day in a losing battle. Rent is $1,350 a month and she fears for her baby’s health, she said.
Gautam spent 19 years in a refugee camp in Nepal after ethnic conflict escalated in Bhutan. She arrived in Canada in 2011. Her husband works a retail job, and the family has been on a social housing wait list for more than a year, she said.
Provincial NDP housing critic Gerry Rogers sums up the province’s sizzling economy this way: “For those who have, great. For those who have not, it’s really, really tough.
“You need a family income of at least $70,000 a year ... to qualify for an average mortgage of about $300,000,” Rogers said.
University and college graduates who expected to do at least as well as their parents aren’t making it into the housing market, Rogers said.
Other residents are “precariously housed” due to low rental vacancies, particularly in places such as Labrador West where mining and other resource projects have driven up prices, she added.
Rogers has called on the Progressive Conservative government to better protect tenants.
“Their landlord can give them three months’ notice and double their rent, and there’s nothing they can do.”
Minister Paul Davis, responsible for social housing in the province, said about $75 million was spent over the last decade to build 1,300 affordable rental units. The government is also working on a program to help families earning up to $60,000 “with the first purchase of a modest-priced home,” he said in an emailed statement.
Higher offshore oil production expected this year has helped make St. John’s the fastest-growing economy among 15 Canadian cities in 2013, the Conference Board of Canada said in its summer “Metropolitan Outlook” report.
Economic growth is forecasted to reach five per cent, it said.
Wage increases in recent years were almost twice as high in Newfoundland than the Canadian average, said Marie-Christine Bernard, associate director of the board’s provincial forecast service.
Record levels of capital investment include spending on the $7.7-billion Muskrat Falls hydro project in Labrador and the Hebron offshore oil development that are both to be completed in 2017.
But Bernard said the good times won’t last forever as overall offshore oil production, on which the province relies for one-third of its revenues, continues to wane.
“Possibly in the future there might be more offshore developments, but for now, there’s nothing that is definite.”