N.L. housing prices jump as Hebron signed
Last Updated: Thursday, August 21, 2008 | 12:47 PM NT
CBC News
This house sold recently for $70,000 more than an identical one sold on the same street in 2007. (CBC)Real estate prices on the northeast Avalon peninsula have taken a steep jump with the signing of the Hebron offshore oil deal, market insiders say.
Steve Winters, a realtor with Remax, said he noticed the trend begin in the spring, as speculation swirled of a coming Hebron deal.
"We're starting to see the prices jump, and what $150,000 could get you last year is not going to get you near this year," Winters said, adding that people from Western Canada, in places such as Fort McMurray and Vancouver, are buying homes on the northeast Avalon sight unseen.
Winters said some people in Newfoundland may get pushed out of the market because of the sudden increase, and that home buyers may not be able to buy the house for which they just received mortgage approval from a bank.
In a new subdivision in the area, real estate agent Charlie Harris told CBC News houses there would jump in price after the Hebron deal was signed Wednesday. One house was on the market Wednesday, the same day the deal was signed, for $280,000.
"This house will be $320,000 or $325,000 probably after today," Harris said Wednesday. "Every house in the subdivision will go up by $50,000 to $60,000."
Business buzz
Not only is the real estate market feeling the effects of the new offshore deal, the business community in the region is heating up as well.
Ralph Wiseman, mayor of Paradise, a bedroom community just outside St. John's, said on the same day the Hebron agreement was signed, he reached an agreement with an offshore company that could see the town's Octagon Pond business park grown by 30 per cent. It was a deal Wiseman said the town had been working on for years. The mayor said he looks forward to more such business deals.
"Anybody, in my view, who wants to come to Paradise, I welcome them because we're going to welcome them with open arms," Wiseman said. "We're going to address the issues that we have and build a better town."
Meanwhile the group that represents offshore supply companies says people will start to see activity related to Hebron fairly quickly.
Bob Cadigan, CEO of Newfoundland and Labrador Oil and Gas Industries Association (NOIA), said the industry hasn't had activity like that which is expected from the Hebron deal for some time.
"We're going to see activity ramp up in the next 18 to 24 months," Cadigan predicted. "The assembly of the project team by the operators, some of the engineering work, it's going to start to have an impact fairly quickly.
"I mean, this is the biggest thing we've seen in one project since Hibernia days, so it's going to have a significant impact."
Construction of the gravity base structure of the Hebron rig is expected to begin in the province in 2012, and the entire project is predicted to create 3,000 jobs locally.
Hibernia was a $5.3-billion offshore project built in the late 1990s. Hebron is a $6-billion project.
The Hebron deal, finalized Wednesday, includes a 4.9 per cent equity stake, which the province will purchase for $110 million.
Premier Danny Williams said the deal may be worth up to $28 billion for the province, depending on royalties and the price of oil.
The earlier royalties estimate of $20 billion is based on a projection that oil would be worth $87 US per barrel.
