St. John's housing market to cool for 2 years, CMHC predicts
Homeowners in St. John's can expect the value of their real estate to fall over the next two years, according to new research by the Canada Mortgage and Housing Corporation.
The corporation's newest Housing Market Outlook is predicting the once-hot market in the capital city will continue to cool off in 2016 and 2017.
- Hot housing market in St. John's cooling off, surveys say
- More space than renters in St. John's, lower demand for high end digs
The group says lower oil prices, and the resulting drop in wages and employment in the oil and gas sector, will lead an economic slowdown in the region.
"Population growth and income growth and employment growth, when we don't see growth in those three key drivers, we don't see growth in the housing market," said Chris Janes, the corporation's analyst for the St. John's area.
The organization is forecasting decreased employment in the city, which they say may lead to purchaser fear and a softer market.
Soft market
The CMHC says sales on the lower end of the local housing market — units from $200,000 to $300,000 — should decline by 2017.
As a result, only about 3,000 homes are expected to be sold on the entire resale market, down from 3,600 in 2013.
The average resale price will also drop, to somewhere between $272,000 and $287,000, according to the corporation's projections. That's down from an average resale price of $306,000 in 2014.
New home starts will also fall significantly to about 600 in 2017 from 1,240 in 2013.
Janes said the slowdown isn't all bad news: It's a good opportunity for first time home buyers in the city.
"Anybody who was maybe waiting to buy a home, waiting to see prices stabilize somewhat, I think that's happening now and maybe they're jumping in," he said.
Sun in the forecast
It's been coming back down to a normalized level that we saw prior to 2007.- Chris Janes
The housing market in St. John's is expected to rebound as the global oil market improves.
"Beyond the current forecast period, the province's economic future should begin to brighten as energy and resource investment rises," the CMHC report read.
Meanwhile, average rents in the city are expected to remain stable.
Janes said the coming period will look familiar to some.
"(The housing cycle has) really been trending upwards since 2007, and it peaked, by all means...in 2013" he said. "Now it's been coming back down to a normalized level that we saw prior to 2007."
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