Looming provincial mini-budget hurting housing market in St. John's, agent says
The looming provincial mini-budget is dragging down the sluggish housing market in St. John's, according to one local sales agent.
Royal LePage representative Glenn Larkin says public-sector employees are worried about impending cuts and rollbacks that the provincial government may introduce this fall. As a result, he says prospective buyers are putting off major decisions — on cars, retirements and houses.
"Usually June, July and August are our busiest months," Larkin said on Wednesday. "June was busy, but July is certainly not busy."
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Following a tax-increasing and job-cutting budget in April, a supplemental provincial budget set to be delivered this fall is expected to contain more cuts — particularly to the public-sector workforce.
The province has been wrestling with a mutli-billion dollar deficit, and finance minister Cathy Bennett has charted a multi-year process to return to balance.
Larkin said people don't know if they'll be pressured to take an early retirement, see their wages rolled back or even have their positions cut altogether.
"[Dwight] Ball didn't do anyone any favours by doing this split budget. If you're going to give it to us, give it to us, then we can deal with it and move on," he said.
"But having half a budget in [April] and now another half a budget coming at us in September, October, so many people are undecided...so everything goes on hold."
Larkin said there was a small bump in June, with people trying to close on homes before the HST increase kicked in.
More data shows softening
Royal LePage released even more data on Wednesday morning that shows the housing market remains slow in St. John's
Larkin says the price of an average home in the City of St. John's has dropped over the past quarter, and the firm's regular House Price Survey shows a 1.5 per cent drop over the last year.
The decline is led by a larger drop in the prices of condominiums, which dropped 8.8 per cent to an average price of about $282,600.
Larkin said the lower end of the housing market will likely make out OK, because first-time home buyers are being enticed to buy with low interest rates.
"The higher-end is getting hit a little bit harder, the middle of the road is being hit a little bit, and the first time buyers — that market is strong," he said.
He said most people will make it through the current real estate slowdown, and the market will pull together again.
"The only people I would be concerned about would be anybody who has purchased in the past 24 months, and have to resell."