RE/MAX St. John’s Housing Market Outlook 2014

December 11, 2013 · Filed Under Remax Newfoundland, Remax Reports 

Affordability, low interest rates, and sound economic fundamentals were the primary factors contributing to ongoing healthy home buying activity in St. John’s in 2013. These favourable underpinnings supported relatively steady demand, despite a further upswing in inventory levels. As a result, home sales in St. John’s are expected to finish the year at 3,650 units—in line with traditional levels, though off the 2012 pace by just under six per cent. While momentum has eased, average price continues to make considerable gains, propped up, in part, by new home sales and strength in the upper-end segment. By year end, average price is forecast to reach $302,500, advancing six per cent over 2012’s record of $285,529. First-time buyers led the charge once again in 2013, seeking out single-family homes and bungalows priced between $200,000 and $300,000 throughout the city and its suburbs. Activity in this segment proved brisk, while the mid-range (priced over $350,000) experienced some softening, given a greater supply of inventory and a reduced sense of urgency.

Stjohnshouseprice

Newfoundland’s economic engine fired on all cylinders in 2013, leading the nation and driving GDP growth ahead by six per cent, as crude oil production rose and conditions improved for large-scale mining projects. While growth is expected to return to more modest levels in 2014, several major developments will serve to prop up confidence and demand in both the resale and new home sectors. These include: ramped-up work at both Muskrat Falls/Lower Churchill and the Hebron Offshore Oil Field, supporting further employment growth; a strengthening natural resources sector, marked by the completion of the Long Harbour nickel-processing facility and subsequent upswing in production; as well as increased production at the Direct Shipping iron-ore project and the Iron-Ore Company of Canada’s Phase II Expansion.  Conversely, the enthusiasm of those at the entry-level price points has been re-invigorated, as buyers impacted by tightened lending restrictions last year made their return to the market in a more positive position in many respects. The upper-end segment also proved quite vibrant, as St. John’s thriving oil and gas sector continued to support high-level jobs. Actual sales over $650,000 have posted double-digit growth, and even when adjusted for year-over-year price appreciation, the momentum has held steady with 2012’s respectable performance. 

Overall, Newfoundland & Labrador should see unemployment contract in 2014, falling to 11.5 per cent. Strong gains in earnings continue to support buying intentions—a significant factor behind the highest provincial homeownership rate in Canada at 77.5 per cent (2011 Census). St. John’s, in particular, remains an attractive draw. The city recorded a 5.5 per cent increase in its population from 2006 to 2011. Significant announcements continue to improve the region’s prospects—from the proposed underground mine expansion at Voisey’s Bay to the extension to White Rose, as well as promising exploration discoveries that serve to boost confidence in the area’s long term potential. There’s no question the outlook is bright. In the interim, Newfoundland is expected to post a more tepid economic gain of 1.4 per cent in 2014, on the heels of 2013’s enviable advance. 

Stjohns house sales

Next year, buyers and sellers in St. John’s and surrounding areas should see similar conditions to those in place at year end. An oversupply of product will place greater consequence on setting fair value, as buyers become increasingly sensitive to pricing. Purchasers will need to be realistic in their pursuits, however, as most homes continue to realize 98 per cent of list price. Unprecedented inventory of new homes will necessitate a gradual correction in prices in that segment, if absorption rates are to improve. Condominium sales are forecast to ease in 2014, as the market approaches saturation. Many new projects have been delayed, re-worked or cancelled, as builders on the multi-unit side take pause. Investors were active over the past 12 months and will continue to seek out promising opportunities. The upper end of the market is anticipated to remain stable. Regardless of price point, market conditions will underscore the timeless adage ‘location, location, location,’ as sought-after pockets post better-than-average activity. Multiple offers, for example, were still evident on well priced product in Churchill Square and Paradise, where the Outer Ring Road has driven tremendous growth. Areas around the University will also prove buoyant as the student population continues to rise, while ongoing revitalization in the downtown core bolsters its appeal. Absorption should improve moving in to the second half of 2014, although buyer’s market conditions will persist through year end. Sales are expected to remain on par at 3,650 units, while average price rises five per cent to $317,600. 

(Source: http://remaxoa.com/13/PR/HMO/REMAXHousingMarketOutlook2014.FNL.pdf)

 

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