St. John's housing market deemed to have peaked
Worries about bubble unfounded, CMHC analysts says
An analyst says the soaring prices for housing in the St. John's area have probably reached their crest, and downplays suggestions that the market is a bubble ready to burst.
"We certainly think the market has peaked in terms of where prices can go and what people would be willing to pay for a home in this market," Chris Janes, a senior analyst with Canada Mortgage and Housing Corp.
A new single, detached home in St. John's is selling for around $350,000 — or about double what a buyer would expect to pay for the same home in 2004.
The market is also bubbling this year, with starts of single homes so far this year up by 16 per cent over the first five months of 2011.
Janes, though, said that's in part due to the sluggish pace of last year, and a reflection of an economy that's been firing on all cylinders.
"We have a very strong economy right now that's been driving the housing market. We have record employment growth, record income growth, population growth is very steady right now as well," Janes said in an interview Monday.
While there have been increased concerns in the media that the Canadian housing market is in a bubble, Janes said the fears do not apply to the metro St. John's market.
"When people talk about a bubble, they're actually talking about prices, [and] price growth has been accelerating at a pace that is faster, I guess, than the economic variables I mentioned," said Janes.
CMHC forecasts an increase of about two per cent for the coming year, or comparable to the expected rate of inflation.
"I would say business as usual, absolutely," Janes said, adding that barring another major oil discovery, there is no reason to expect a surge in prices.
"The housing market should remain fairly stable as we move into next year."