Despite surge in home prices, St. John's still affordable: CMHC

Real estate prices in St. John's may be soaring this year, but Newfoundland and Labrador's capital remains one of the most affordable cities for Canadian house hunters.

Canada Mortgage and Housing Corp. says prices for homes in the St. John's area have jumped 20 per cent so far this year. Much of that activity came this summer, leading up to the agreement to develop the Hebron oil field off Newfoundland's southeast coast.

Nonetheless, CMHC found that St. John's still offers good value for homebuyers, at least when compared to other cities.

"In terms of Canada, we're still relatively cheap, or affordable," said Chris Janes, a CMHC analyst based in St. John's.

For instance, the average home in St. John's on the MLS system is about $175,000, while the comparable countrywide price is about $310,000.

"That’s a very large difference in price," Janes said.

Two national surveys ranked St. John's as the third-most affordable of Canada's major cities, behind only Thunder Bay and London, Ont.

The surveys took into account not only home prices, but average household incomes and the ability to afford local housing stock.

The real estate market in St. John's and neighbouring municipalities has markedly changed this year, with some properties selling not only on the day of listing but well above the list price.

Laura Churchill, who moved into her first new home just two weeks ago, said unpacking was not nearly as stressful as this summer's search for a place to live.

"We put in bids on houses that we thought were reasonable, and it ended up going for way above, and we'd have to drop out," Churchill said.

CMHC is not expecting the St. John's market to cool down soon. To the contrary, the federal agency expects housing prices in the metro area to climb by 15 per cent next year.