What To Expect In 2014 Province By Province: Newfoundland And Labrador

The most eastern province in Canada and the last to join Confederation in 1949, Newfoundland and Labrador (NL) is interesting in how the population inhabits the province.  The mainland of Labrador, by far the largest portion of the province, is only home to approximately 31,000 Newfoundland and Labradorians, while the island of Newfoundland and smaller islets are home to the remaining 495,000 people.

With most of the population living on an island, the housing market in NL is made up of sizeable regions, with many markets more populated than others.  The capital, St. John’s is home to 40 percent of the provincial population, and is Canada’s 20^th largest metropolitan city.

Do you plan to make a living in NL this year?  Are you more interested in the island or the mainland?  And what can you realistically afford to invest in?  All good questions, let’s help you find answers.

Variable or Fixed Mortgage

Many people will find a home that they love, and then work out the financing arrangements afterwards, even if the loan is unaffordable.  But if you want to be a financially secure homeowner in Newfoundland and Labrador, take the time to compare the lowest mortgage rates you can find before committing to one property.

The first question to ask yourself is whether you are interested in a variable or a fixed mortgage.  Variable mortgages are popular for the lower rates in the short term, and are particularly attractive in today’s market due to the three plus year freeze on interest rates by the Bank of Canada.  However, fixed mortgages ensure you pay the same balance each month throughout the term, and are a more stable investment.

Once you know what type of mortgage best addresses your needs, you can decide on the term of the loan, who will issue the agreement, and other financial details.  But before you lock in the agreement, you first need to find the right house.  And to do that, you really should know the market of NL.

2013

NL began 2013 on a strong note, and boasted one of the largest economic growth rates in Canada.  Private investments in new oil production helped lead to ventures in other energy sectors, and these investments also helped increase consumer spending across the province.

But as the year went on, projects were nearing completion, and investments began to dry up.  As a result, the demand for housing slowed throughout the year along with the reduced economic output.  According to the CMHC, the number of new single detached starts fell to approximately 2,350 units to end the year, while multiple unit developments declined to 575 units.

This slowdown in starts was also mirrored by a reduction in total home sales, which declined nearly 15 percent from the year prior to approximately 4,000 transactions to end the year.  However, while sales, starts, and incomes slowed by the end of 2013, home prices continued to rise but at a more muted pace to approximately $287,000.

Home Price Predictions 2014

For many people in NL, the start of 2014 will be difficult.  The private sector is expected to reduce investments in the province, while outstanding projects will come to an end early in the spring.  As a result, job security could be on the line for many Newfoundland and Labradorians.

However, over the course of the year, many Canadians are expected to migrate to NL to work in the newly completed oil development projects – similar to Alberta.  This inflow of new workers will slow the declining rate of housing starts, with single detached homes remaining more or less on par with 2013.  Investments in multiple units on the other hand, will rise throughout the year, as new workers will require places to rent, and eventually buy.

The CMHC predicts total sales across the province will begin to rise again after declining in 2013.  The target is approximately 4,100 new sales, and rising demand throughout the second half of the year is expected to raise prices above the $290,000 mark.

St. John’s

The capital of NL and one of the busiest ports on the Canadian east coast, St. John’s is the largest city in the province.  Fittingly, the capital is also the centre of the largest housing market in NL, home to approximately 40 percent of the population of the entire province.

The total volume of housing starts in the capital is rising month to month, with the CMHC expecting St. John’s multiunit market to continue expanding rapidly.  Meanwhile, the number of single detached homes started in the region will remain more or less in line with levels seen in 2013.

Despite increased multiunit listings, total sales in the capital are expected to continue the downward shift begun in 2013.  Reduced sales will also put downward pressure on prices, with MLS listings predicting prices around $310,000 throughout the year, up approximately $5,000 from the year prior.

Labrador

While Labrador is by far the largest part of the province, much of the region is uninhabited by Newfoundland and Labradorians.  Most communities consist of only a few hundred people, with the largest city, Labrador City consisting of only 10,000 people.

Labrador City and Wabush, two of the largest cities, are located along the western border of Labrador that is shared with Quebec.  Despite being part of a separate province, the state of the local housing markets is heavily affected by trends in Quebec.

Closing Thoughts

If you plan on becoming a homeowner in NL, this is a good time to begin asking the right questions.  But with so many questions currently hanging over the market, now may be a time to wait and see how things unfold throughout the year.

The CMHC predicts mortgage rates will remain affordable, and with new jobs on the horizon in the second half of the year, there could be very favourable buying conditions near the end of 2014.  The island of Newfoundland will be where the bulk of housing activity occurs, but keep in mind that many new starts will be multiunit and condo developments.