It’s budget season.
And for both the recent federal budget and Tuesday’s provincial budget, representatives of the province’s homebuilding and real estate sectors were paying attention, looking for some good news.
And you can’t blame them.
The fortunes of both the sectors that build the homes and then sell the homes are inextricably linked to the health of the provincial economy and — in particular — the consumer confidence of Newfoundlanders and Labradorians.
And both are hurting in the wake of many combined factors in recent years: an economic downturn; the dip in oil prices; and changes to federal mortgage rules that reduced the number of first-time homebuyers who could qualify for a mortgage (the infamous mortgage stress test), among others.
So now that the provincial budget is out, what’s the takeaway?
When we spoke to representatives less than an hour after the budget speech, neither homebuilders nor realtors were exactly jumping up and down with excitement.
Their reactions were more a general approval of the positive direction the budget seems to point rather than any specific items designed to help their industries.
“What do I like about it? You know what, (it’s a) stay-the-course, no-surprises, steady-as-she-goes kind of budget,” Bill Stirling, CEO of the Newfoundland and Labrador Association of Realtors, told my Telegram colleague Barb Sweet after the budget speech Tuesday.
“The housing markets are all local and they are driven by local populations, local income growth and economic growth and job opportunities,” Stirling said. “All of that seems to be moving in the right direction. All the indicators in the budget are that we have turned the corner on all of those. So that’s good for the housing market, for the first-time home buyer and housing prices.
So it’s not so much a comment on the budget but the overall economics of the province.”
Asked what he didn’t like, Stirling said he’s still concerned at the size of the structural deficit. “They’re still spending a lot of money. They’ve eventually got to get that under control. They managed to hide it a little bit this year, but they’ve still got this structural problem where they are bringing in less money than they are spending. Eventually that has to be dealt with.”
“All the indicators in the budget are that we have turned the corner on all of those. So that’s good for the housing market, for the first-time home buyer and housing prices.” — Bill Stirling, CEO, Newfoundland and Labrador Association of Realtors
When I spoke to Victoria Belbin, CEO of the Newfoundland and Labrador Homebuilders Association (NLHBA), she had a similar, generally positive response.
“The good news is they have a plan to mitigate electricity rates for residents. Government seems to be really taking that seriously. And it is serious because residents of many segments of society would not be able to manage such an increase,” Belbin said. “This is something they had to do and we’re very pleased that they did.”
Both Stirling and Belbin also welcomed budget news on a rebate program for homeowners looking to switch to heat-pump technology for their homes — although the details of that haven’t been fully outlined yet.
But over and above that, the provincial government didn’t actually have anything specifically tailored to help either the homebuilding or real estate sectors.
Homebuilders had been looking for a rebate on the 2 per cent provincial sales tax on new-home construction. That was introduced in July 2016 and has been one more extra cost homebuilders faced.
The association had been working on research supporting such a move, but it couldn’t be delivered to the government in time for the budget. While it wasn’t included in the budget, Belbin said they did get a commitment from Finance Minister Tom Osborne to discuss the possibility.
Such a move would be a cost to the government, but Belbin said removing it could help boost the homebuilding sector, which, in turn, would increase its contribution to the provincial economy.
And that’s nothing to be sniffed at. For 2017 — even though the numbers were lower than a few years ago — the residential construction, new homebuilding and renovation/repair sector was responsible for 11,982 on- and offsite jobs, $706 million in wages and $1.5 billion.
So while there was not a lot specific for them, Belbin said the generally upbeat economic news in the budget document is very welcome for N.L. homebuilders.
“All of the economic indicators that they announced in the budget are showing positive increase, whether it’s job growth or employment or household income, oil production, exports — these are all positive indicators which will hopefully help boost consumer confidence,” she said.
There also may be good news for homebuilders in the anticipated bilateral housing agreement with the federal government. Details of that will be announced at a news conference in St. John’s Wednesday.
When I spoke to Belbin, Stirling and NLHBA president Curtis Mercer just after the federal budget, we spoke a lot more on the challenges to both homebuilding and real estate in this province, the downturn that’s hit both and the pressures created by things like Ottawa’s mortgage stress test.
We talked about the state of the industry and the fact that both are becoming hopeful that the downward dip has bottomed out and growth is ahead in terms of housing starts, housing sales and housing prices.
I’m going to leave that for a future column because there’s a lot to unpack.
Watch this space.
Mark Vaughan-Jackson is The Telegram’s business and op-ed editor. He can be reached at [email protected]
MORE FROM MARK VAUGHAN-JACKSON
