Newfoundland and Labrador’s housing sales are starting to cool off, according to the annual report published by the provincial Realtor association.
The number of homes sold through the MLS system totalled 554 units in July, declining 21.1 per cent from July 2022. Year-to-date home sales totalled 2,712 units over the first seven months of this year, a decrease of 23.9 per cent from the same period in 2022.
“We’ve just come off of what I would call two uncharacteristically busy years, not only in Newfoundland and Labrador but right across the country,” Bill Stirling, chief executive officer of the Newfoundland and Labrador Association of Realtors, said Thursday.
“The pandemic years, for whatever reason, drove real estate activity right across the country. We’re starting to see those kinds of sales levels return to a more normal pattern.”
But even with sales starting to slow down, Stirling said, the province is still between 20 or 30 per cent above pre-pandemic years.
“So the market is still strong. There’s lots of demand out there,” he said. One of the challenges right now is relatively low inventory, he added. “People can’t sell what’s not there, so we’re seeing sales levels start to drop off.”
New home construction is also slowing, contributing to the lack of inventory.
Inflation has increased costs, Stirling said, making building a new home increasingly expensive.
“The Bank of Canada wanted to cool the Canadian housing market, and they’ve been very successful in doing that,” he said.
“Interest rates are significantly higher than what they were a year ago, so that’s impacting first-time home buyers in what they qualify for in terms of a mortgage but it’s also making buyers kind of sit on the sidelines to wait until rates at least stabilize or start to come down.”
Stirling said demand is also starting to slow while Newfoundland and Labrador’s population has grown, which is raising prices.
The rest of country saw large price spikes after the pandemic hit that have since fallen by 20 to 30 per cent, Stirling said, but that hasn’t happened in Newfoundland and Labrador.
“Our situation has been one of slow, moderated, steady increase in values over the last three years. So it’s much more stable,” he said.
Home inflation
To look at the impact of inflation on home prices, the Realtor association uses its own metric, called the home price index — similar to the consumer price index, which measures inflation.
“In the St. John’s area, house values are about 16 per cent better now than they were three years ago. In much the rest of the province the growth has actually been stronger,” said Stirling.
“In central Newfoundland, compared to three years ago, our house values are about 25 per cent stronger, Labrador is about 36 per cent growth, Corner Brook and Humber Valley area, it’s about 32.5”
Stirling said housing prices are also directly affected by community activity, pointing to wind energy development and potential airport sale in the Stephenville area as an example. Housing prices in Labrador West also rise and fall on the value of iron ore, he said.
“When you’re thinking about what’s happening in your community or your region, that has the greatest impact on house values,” he said.
“We’ve seen some of the strongest growth over the last couple of years in non-urban parts of the province.”
For those hoping for housing prices to fall, Stirling said that likely won’t happen any time soon.
“We’ve heard lots of talk in the media in the last six months about the housing crisis and housing affordability issues — those are going to continue to be challenges for everybody,” he said.
“New home construction, if that doesn’t come back then we’ve got limited supply. I think all in all, I don’t see anything happening in terms of house prices coming down.”
Listen to the full interview:
CBC Newfoundland Morning6:10High interest rates have scored a hit on the province’s housing market, but things are still pretty hot for sellers. The head of the provincial association of realtors told us why
If you’ve been trying to buy a house this year, you know that in this province, it’s definitely a sellers’ market. But high interest rates and inflation have been making a dent in things this year. This week, the province issued its report on the most recent home sales. Bill Stirling is CEO of the Newfoundland and Labrador Association of Realtors.
