The Canadian Real Estate Association (CREA) publishes a monthly report on the trends of the latest activities in the Newfoundland and Labrador housing market. There are significant trends in the housing market at the beginning of the last quarter of the year.
First, Newfoundland and Labrador housing prices have appreciated despite other Canadian provinces' sizable drops in property and housing values. The national average for the decline in housing prices is 4.3%. On the flip side, CREA reports that the housing prices in Newfoundland and Labrador have experienced a moderate gain of 8% on a year-on-year comparison. The benchmark price for housing in Newfoundland and Labrador (as of September 2022) is $285,200.
The price for single-family homes hit an average of $287,200, up 8% compared to the previous year. Meanwhile, townhouse or row units sell at an average price of $266,500, up 2.6% from last year's period. The prices for apartments in Newfoundland and Labrador experienced the highest growth at 15.1%, which means they cost an average of $226,900.
The average housing price in St. John's (the biggest city in NL) is $336,300 for a single-family home. This housing price also saw an increase of 7.5%. Essentially, all benchmark prices for all types of properties in St. John's and most of Newfoundland and Labrador saw a modest appreciation.
The price increase of housing and other properties in Newfoundland and Labrador is impressive despite the decline in the number of homes sold, new listings, and active listings. In fact, the number of active listings in the Newfoundland and Labrador housing market is the lowest within five years. Due to the limited number of active listings, Newfoundland and Labrador’s inventory of real estate property is for five months. Therefore, the inventory in Newfoundland is much lower than the average of 11 months for this housing market.
The issue of a shortage of homes is something that the Canadian real estate market has battled for decades. Despite the lack of real estate activity for much of 2020 and 2021, it is surprising that it remains an issue. In fact, the supply of homes and properties on the active listing has hit its lowest in a decade.
Real estate experts fear that with many newcomers and immigrants coming to Canada, especially Newfoundland and Labrador, this will cause a rise in demand for homes for sale or rent. When this happens, affordability can end up hurting the market. To avoid any real threat in the Newfoundland and Labrador housing market, real estate professionals call on the policymakers to improve existing policies to ease regulatory burdens on builders, especially those who are hesitant to commit to new housing projects.
The Current State of Newfoundland and Labrador Housing Prices
What do the experts have to say about the Newfoundland and Labrador housing prices and the market, especially concerning these numbers?
The Newfoundland and Labrador housing market remains one of Canada's most affordable housing markets. This is despite the appreciation of home values in the province. In addition to the sustained housing appreciation, the market exemplifies resilience that it can withstand the impact of skyrocketing interest rates. However, the market is not entirely immune to the effects of the rising interest rates, as there has been a considerable decline in the number of homes sold in the past year. The strong affordability of the housing market in NL is the secret weapon that prevents this market from crashing. Despite the rising home values, they continue to be within the range that people can afford to close on the home sale.
Newfoundland and Labrador relatively small housing market is another factor contributing to its resilience. Real estate experts agree that this smaller market is not as rate sensitive as the bigger housing markets in Canada like Ontario. The slow and steady growth of the real estate market is paying off now because the market experienced none of the 20% jump in home values and interest rates like it did for the rest of Canada (or North America). This steady growth is part of why the Newfoundland and Labrador market has remained robust during the first two quarters of 2022.
Forecasting the Newfoundland and Labrador’s Housing Trends
The housing market in most of Canada and North America is on shaky grounds. Home buyers and sellers are closely monitoring the interest rate movement. The movement will impact the direction of this housing market in the next few months.
If the upward trend in home values continues in the next few months, especially as there will be new house construction projects on the way, you can expect that there will be an influx of investors from outside the province. With relatively fewer borrowers in the Newfoundland and Labrador housing market, the interest rate hikes will only feel like a “pinch” to the borrowers and the market rather than a real threat.
Most of the activity in the housing market of Newfoundland and Labrador can be attributed to the St. John’s area. This is not surprising, however, given that the greater St. John’s area has been touted as one of the best places to live in the province and serves as the commercial center. The residential activity in the greater St. John’s area housing market has helped to soften the blow on the province’s overall housing market performance.
With the threat of continued interest rate hikes and growing demand for properties in Newfoundland and Labrador, particularly in St. John's area, local real estate experts forecast a growth in prices of 8-10%.
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