Property Energy sector expected to maintain buoyancy of housing market
CINDY WILSON/TELEGRAPH-JOURNAL
Dave Cochrane of Royal LePage has never seen such ‘economic optimism’ in the city.
Khalid Malik
Telegraph-Journal
Appeared on page C1
SAINT JOHN - The anticipated growth of Saint John as an energy hub and the fact investors from Western Canada are looking at real estate in Atlantic Canada as a good investment are two of the reasons behind a strong resale housing market in Saint John.
Royal LePage Real Estate Services, in a report this month, said the growth of the energy sector in Saint John is expected to create an abundance of jobs and maintain the buoyancy of the housing market, compensating for the significant loss of trades people who have flocked to Alberta.
Dave Cochrane, manager of Royal LePage Atlantic in Saint John, said Thursday the refurbishment of Point Lepreau, the prospect of a second nuclear reactor, the proposed construction of a second oil refinery and the construction of the LNG terminal are creating a lot of jobs. The construction of the refinery alone would result in 5,000 jobs and the refinery would employ 2,000 people once in operation.
"LNG is the largest independent trades employer right now," he said.
He also said investors from Western Canada are starting to buy properties here because the prices here are "very reasonable." These investors live in Alberta. "They are not coming to live here," he added. The trades people who would come the city to work, will live here, Cochrane said. "That's why western investors are buying here."
He said the buyers are "not overly concerned" about the slight increase in interest rates this week. "Interest rates are still very reasonable compared to 10 to 15 years ago," said Cochrane, who has been in real estate business for 14 years. "We don't want to see them go up, but it is not a major concern right now," he said. "I have never seen economic optimism like it is in Saint John right now."
Gino Romanese, vice-president of Royal LePage Real Estate Service, said "ironically, the market will become more active because of the recent hike in interest rates." The people who are expecting to buy in the next six months or so will decide to buy sooner because of the fear of the rates going up further, he said. "But no one expects the rates going up too high," Romanese said.
"Things are definitely rosy in Saint John," said Angela Beyea, executive officer of the Saint John Real Estate Board. "Sales are up considerably from this time last year." She said 328 units were sold in May, which is up 20 per cent from the same month last year. In April, 201 units were sold, up 17 per cent from April 2006. "This indicates the market is doing very well. Across-the-board residential buying is up," Beyea said. The average price of a house that sold in May was $137,535, six per cent more than last May.
The May average price is one per cent lower than in April this year, but the sales volume was up by almost 50 per cent, she said. "It is useful to look the average price over a period of time, but the increase of six per cent over last year shows that the pricing trend is up," she said. Beyea said the increased sales are a result of more jobs in the area. She said 5,700 new jobs were created in Saint John over the first quarter of this year. This figure is up by 400 from the first quarter last year.
"Consumer confidence is high and that helped to push up the housing market in Saint John," Beyea said. She also said the Canadian Real Estate Association is forecasting that housing prices are going to rise over the next two years. "There is increased economic activity going on in Saint John and the city will reflect the same increase in housing prices," Beyea said.
Nationally, the resale housing market finished the second quarter on strong and steady footing; surprising many by its strong momentum, Royal LePage said. Healthy and robust conditions are expected to prevail through to year's end as all regions are poised to experience a rise in average house prices, with double-digit gains forecast for Edmonton, Calgary, Winnipeg and Regina, it said.
Echoing the growth and activity experienced in all Canadian markets in the first half of the year, the national average house price is forecast to rise by 9.5 per cent, passing the $300,000 mark for the first time, to $303,300. Home sale transactions are projected to rise by eight per cent to 522,306 unit sales by the end of 2007, the report said.
"The momentum from the year's extraordinary start spilled into the second quarter, compounding typically busy spring market activity and stimulating solid price appreciations in almost all regions of the country. These conditions will certainly be an impetus characterizing Canada's real estate market through to year's end," said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services.
"As we move into the second half of the year, we continue to expect areas of aggressive price appreciation in the west, and modest, mid-single digit price increases in Central and Atlantic Canada."
Royal LePage said its survey of Canadian house prices is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast.
According to Statistics Canada, investment in non-residential construction in Saint John was up by nearly 23 per cent in the second quarter of this year to $33 million from $27 million in the first quarter. According to the figures released this week, overall, eight provinces showed increases in commercial investment in the second quarter. The largest contributions (in dollars) occurred in Alberta, where investment rose 15 per cent to $1.5 billion, and in Ontario, where it increased 3.5 per cent to $2.1 billion. Both were all-time highs.
