Compared to the end of the third quarter last year, prices in all housing categories have picked up in Newfoundland’s capital. A typical family bungalow price is now set around $264,000 up 9.9 percent from last year. A two storey house is also up 8.2 percent to about $357,000; with condos posting increases upwards of 9 percent from last year as well to about $281,000. Nationally for Canada home prices on average in all categories saw modest increases though not to the degree that was found on the east coast.
Glenn Larkin of Royal LePage Professionals 2000 says that with the many projects for urban development currently taking place in St. John’s, home values and prices have benefited from these investments. He also says that these price increases together with the low mortgage and interest rates; Newfoundlanders are choosing to buy a new home at higher value to their current assets, which is skewing the demographics of the people buying.
“The number of first-time buyers has cooled due to the new mortgage regulations which took effect in July.” Royal LePage credits the government’s changes to mortgage lending rules as a key reason for the lessening of younger homebuyers.
While Canada and Newfoundland especially saw home prices increase from last year’s third quarter, the number of actual homes sold nationally has dropped. Royal LePage CEO Phil Soper says that as sales continue to fall, prices on average will begin to soften as well. Sellers will react to the slowing demand by lowering their prices to keep up interest; the 9 percent drop in sales for August reflected this change and Soper expects September to continue that trend.
Bigger cities such as Vancouver and Toronto are already seeing a bit of a comedown in their home prices while St. John’s and other east coast cities may begin to follow suit in the coming quarters. Soper says analysts predicted what he calls the “cyclical change” earlier in the year as an aftereffect of Canada’s strong growth in housing over the last few years; he also credits the government’s intervention on mortgages with speeding up the change.