The once-sizzling housing market in the St. John's area continues to lose steam, with the number of homes sold dropping by nine per cent last year, and housing prices flatlining after years of head-shaking growth.
Starts for single detached dwellings last year — just over 900 — also dropped to their lowest levels since 2001, and the number of active listings have been growing steadily, now standing at roughly 2,500 units.
What's more, vacancy rates for apartments are soaring, reaching 4.6 per cent in 2014, almost double the yearly average over the past decade.
Those were some of the market indicators revealed during the 2015 Housing Outlook Seminar in St. John's on Wednesday.
Hosted by the Canada Mortgage and Housing Corp. (CMHC), the seminar attracted nearly 200 people, including realtors, developers, lenders, appraisers and home improvement retailers.
Expert presenters described a market that's expected to remain flat for the next couple of years, but with expectations for a rebound as commodity prices recover and future projects in the oil and gas industry get underway.
"We see housing starts in line with where they should be based on demand and some of the demographic shifts that we're having," said Chris Janes, a senior market analyst with CMHC.
Not imminent crash
It's a far cry from the red-hot housing market that generated so much hype for much of the last decade, with prices increasing by an average of nearly nine per cent each year, including a 20 per cent surge in 2008.
But with the rate of job creation slowing and uncertainty in important sectors such as oil and mining, a slowdown is not surprising.
"Given the current economic environment, I think a relatively lower level of house price growth is sustainable and perhaps more healthy," Janes explained.
'We see housing starts in line with where they should be based on demand and some of the demographic shifts that we're having.'- Chris Janes
Homes prices are expected to increase by just 1.2 per cent in 2015 to an average of $310,000, which is below the rate of inflation.
The downward trend in overall home sales is also expected to continue, falling to 3,200 this year, a decline of roughly 16 per cent since 2012.
Despite the numbers, people like Janes are not suggesting a crash in imminent. They say the market is coming off an unsustainably high rate of growth.
Builders are pulling back as the demand for single detached homes weakens, and shifting focus to the growing interest in renting, especially among those 60 and older, he explained.
"I think in general it looks fairly positive, despite what some people may be anticipating, given the current commodity environment, particularly oil prices, which are top of people's minds right now," he said.
Janes said annual sales of more than 3,000 homes and a vacancy rate of under five per cent is a healthy place to be for St. John's and area.
So why aren't home prices falling?
Janes said it's a combination of factors, including the continuing strength of the area's economy, land costs and a general trend towards higher quality homes.
"Homes today are of higher quality than they were 10 years ago," he said.