N.L. real estate prices soar

The Canadian Press
Send to a friend

Send this article to a friend.

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.”

Organizations: Newfoundland and Labrador Association of Realtors.Houses, Conception Bay South, Statistics Canada Conference Board of Canada

Geographic location: Newfoundland and Labrador, Canada, Calgary Edmonton Saskatoon Canada.The Nepal Bhutan Hebron

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • paul bishop
    September 14, 2013 - 06:52

    Its a typical boom town but one gone even crazier than Fort Mac or the likes. Us humble Newfoundlanders were once modest and could live and be happy off the land and sea. We gave to our next door neighbour, didnt care what the other person had paid for their house, maybe helped them build it, had a great sense of community, knew and loved our neighbours and sometimes there were indeed people with little or nothing. Though wonderful for our province to prosper and give people who had very little high paying jobs and new homes etc , the attitude that has taken over our little island has kicked out our sense of culture and has left us now one of Canadas unfriendliest province?? ( yes voted ). Friends of ours ( say Sally and Sam ) were visiting for a week this summer and first couldnt believe the price of fruit, vegetables, meat, orange juice and milk!!! For a low income family in NL, eating healthy in this province costs a fortune!!! But still you can get a 2 litre of pepesi for 99 cents! Go figure. My mainland friends wanted to take in the George Street festival but came back after an hour of trying to watch a band. They said not only was there no room on the street, they said everyone was drunk and drunk to the point where they were pushed, told to f-off and had a drink spilled on them. When Sally went to the washroom she was stopped in her tracks by four young woman who were doing cocaine on the back of one of the toilets, door wide open. She later saw one of the women playing in a band there at a pub and she waved to her with a wink. Everywhere they went they said you could feel the oil boom mentality. During the day, they said the aweful and worst roads ( yes in Atlantic Canada voted ) were filled with dangerous drivers who didnt use signal lights and young guys in big trucks flying through towns. They tried to take their kids to a movie but it was overcrowded and sold out. They even saw Rian Clowe there with his daughter skipping a popcorn line because he would have missed the movie if he waited so he headed for a vending machine to get some snacks for his little girl. Now Rian Clowe should jump the line, just saying!!! When I showed them the price we paid for our bungalo here in Paradise ( where they ruined a tire hitting a pothole and while coming up Topsail Road and waiting 45 mins in traffic at 4 on a saturday ) I could tell they thought I must be insane. Their kids said they couldnt wait to go back home and go hang out and swim on one of the beaches ( Topsail beach would be considered the pit or driveway to one of their beaches ) or walk the water- front in the evenings listening to buskers and sitting there getting icecream. Oh well, they could have stood in a 40 min line up at the keg...(our waterfront claim to fame where the barhoppers go first to prime) , got completely wasted and walked our most popular strip, george street hoping to not get something put in your drink!! They were also happy to go back to their three level home just outside of Halifax with two acres where there was peace and quite but was close enough to all amenities and not be crowded in a movie or restaurant. Oh and they paid $280 thousand 3 years ago for this beautiful place that is not on a postage stamp. Noone in their area asks how much they make or cares. Everyone seems friendly and cherry and wants to lend a hand on yard sales etc. Like Sally said " where we live its just happier... this place is gone crazy with money". Bye Bye old Newfoundland, I wish our kids could have known who you were.

    • a business man
      September 16, 2013 - 08:19

      Honestly, everything you say about Newfoundland is true, in my opinion. I was born in NF, and I left for school in Ontario in my late teens. I returned recently to divest/sell off some of my family's assets. I will share two positions of mine. 1) I am happy about the oil boom because I own rental housing (that I did not sell off). These properties were paid off in full in the late 80s and early 90s, which makes them a steady income stream for me. That said, the rent has doubled in recent years because of the oil boom. I certainly could afford to leave the rent the same, but the market dictates that I can charge lots more, so I do. Sure, many low income families cannot afford food, but that is not my problem. And yes, some of my tenants have left because they cannot afford the rent, but that is okay becauase they were replaced promptly with new tenants who could pay the higher rent. 2) I do not care about the loss of Newfoundland's culture because I live in Ontario. When I left Newfoundland, it was my goal to make lots of money and build a life in Ontario. I succeed. Now, my whole family lives in Ontario, and our time in Newfoundland is just a memory. But our assets are real and still making money for us. So with that line of thinking, I welcome to Newfoundland all the coke snorting, queue jumping, rudeness and self-centeredness that comes with the oil boom because a) it is part and parcel of the oil boom which has made me lots of money as a landlord, and b) because it does not effect me anymore since I am back in Ontario. In short, I welcome anything that adds value to my portfolio, regardless of how in impacts other people (who are not my family/friends)

  • HRG
    September 13, 2013 - 15:21

    Welcome to the inflated oil market driven pricing of goods and services. I survived two downturns in the Calgary market and I can tell you it was horrible. People were throwing their keys on the lenders desks as the mortgage was higher than the value after the downturn ! It was not a pretty picture. MAKE SURE you save for that " Rainy Day ", as it will come ! Take it from someone that has been there !

  • Jayemeff
    September 13, 2013 - 13:37

    It's great that Newfoundland has finally become a "have" province. Not so great is that we are well on our way to becoming another Alberta, where unless you work in the oil industry making oil industry wages, you will barely be able to afford to live here. One of this province's best assets was that people could have a decent life here without needing a 6-figure income. Those days are fast disappearing.