St. John’s released its 2019 economic review on Thursday, and it was a mixed bag of growth and decline.
In a news release, Mayor Danny Breen said both the labour market and household income posted positive growth, but economic slowdown was evident in housing starts which declined 24.1 per cent to 480 units last year.
Canadian Home Builders Association NL CEO Victoria Belbin said that decline had “an obvious impact” on association members.
“Over the past five to seven years, we’ve seen a significant decrease, but we knew we went through a boom in housing, so we’re seeing a drop off in the industry, obviously,” she said.
Belbin said the nearly one quarter decrease in new home builds is reflective of several factors. There’s the ebb and flow of the economy, but Belbin squared some of the blame on the stricter qualifying criteria of new mortgage rules for first time homebuyers introduced a couple of years ago.
“It’s impacting our market considerably here in Newfoundland and Labrador,” she said because a big part of the province’s market for new construction is first time homebuyers.
“These rules were put in place to target certain markets – urban markets where the cost of housing is quite high, and it was supposed to impact those markets. However, it was a blanket rule across Canada, and we are seeing regions across Canada being impacted significantly because of these rules. So, we would like to see more a regionalized approach to these rules.”
While new builds stagnate, Belbin said the city has “a very healthy” renovations sector.
She said residential construction is still a billion-dollar industry in the province, and businesses have reacted to changes in the market by diversifying or downsizing, though she admits some members have moved to other provinces.
Gains expected from higher oil production
While Belbin said the association would love to see that 24.1 per cent number decrease in the coming years, she is optimistic and anticipating the economy will improve.
“We are starting to see some of those economic indicators start to turn around. A little bit more slowly than we’d like, but they are turning, so we’re optimistic.”
Breen describes the outlook for 2020 as “subdued”.
“Although economic gains are expected from higher oil production, other indicators such as employment, household income and housing starts may soften as the economy continues to adjust to lower Muskrat Falls activity,” he said.
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