A St. John's-based broker says the province’s comparatively mild price growth is good news for buyers
Across Canada, low interest rates and lack of supply saw house prices continue to soar throughout 2021 – and it was the same story in Newfoundland and Labrador, although the eastern province didn’t experience the same steep increases as many other markets.
The average price of a home in Newfoundland was up 10.1% in October compared with the same time in 2020, according to the Multiple Listing Service Home Price Index (HPI) composite benchmark. Still, that figure stood at just $322,100 following the increase – a snip compared to the eyewatering sale prices posted elsewhere.
The year-on-year growth was also milder than almost all other areas, with the Canadian Real Estate Association (CREA) reporting that the province posted the smallest upward change in average house prices across the country in 2021.
All that was good news for the Newfoundland market, according to St. John’s-based broker Robert Jennings (pictured top), owner and broker at East Coast Mortgage Brokers, who told Canadian Mortgage Professional that the province was gearing up for a busy year ahead without some of the madcap intensity that pervades other Canadian markets.
“I’m really optimistic about 2022,” he said. “We just had an incredible January, and a lot of conversations about interest rates and the Bank of Canada have created opportunities.
“You also get those New Year’s resolutioners who plan on building in 2022. It was so busy in new home construction in Newfoundland [that] a lot of people said ‘Hey, we’re going to sit on the sidelines in 2021 and go back at it again in 2022.’”
Read more: Inside Newfoundland’s pandemic mortgage boom
That interest in new home construction has also been piqued in recent weeks, Jennings said, by the plummet in lumber prices, with Bloomberg reporting that lumber futures on the Chicago Mercantile Exchange fell for the seventh consecutive day last Tuesday.
That cool-off period is the longest since July, and suggests that the commodity’s notoriously high costs could be set for a protracted downward spiral.
“We’re seeing those people pop back up because they wanted lumber prices to normalize a little bit,” Jennings said. “We just saw lumber futures down 30% over the past month, so 2022 is setting up to be a very busy year.”
The trend of Canadians from other parts of the country setting their sights on a move eastward also looks set to continue throughout the year, Jennings said, with out-of-province clients already having expressed an interest in purchasing property in Newfoundland in the opening weeks of the year.
The oft-referenced inventory shortage that’s bedevilled the Canadian market in recent times remains the “number-one” concern in Newfoundland and Labrador, he added, with supply scarce across the province over the past several months.
Still, a recent report by RBC Economics’ Robert Hogue indicated that the region is faring better than other markets on that issue too, even if the number of active listings on MLS in the province in December was over 25% down compared with the 10-year average.
“Inventories were at all-time lows in provincial housing markets accounting for 80% of activity in Canada at the end of last year – with only the Prairies, and Newfoundland [and] Labrador seeing a milder scarcity of listings,” Hogue said.
Jennings said that despite that housing shortage, bidding wars and purchases over listed price hadn’t been too extreme, with a typical scenario seeing a property in Newfoundland sell for $10,000-$15,000 over its initial value.
Read more: RBC on the state of home-buyer competition this year
He said that as the beginning of the busy spring season grows nearer, that inventory issue was unlikely to play a significant role in cooling the market – or seeing house prices explode.
“The calendar has turned over to February now and we’re getting closer to spring market, so the hope is that there’s enough inventory because demand always increases in the spring, and supply always increases in the spring,” he said.
“We’re pretty optimistic that things will loosen up and there’ll be more supply and demand, and more people are going to break ground and build because they didn’t last year [with] supply chain interruptions, cost of building supplies and contractors not having the capacity to do it.
“I think we have enough momentum to carry over into 2022 to have one of the better years in our history for sure.”
