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Smart investors know that any “brilliant” investing moment or decision started months or years or even decades ago. They know that they were laying the groundwork for these eureka moments via thorough research and steadfast analysis.
Any investor in any field should know as much as they can about markets they’d like to target, and this becomes especially true when it comes to real estate. Canadian real estate investors should understand that the markets that they target are just as important as properties they wish to purchase or alterations they wish to make to those properties. Let’s now take a look at one specific province to better understand what opportunity may lay there – Newfoundland real estate.
But first, if you want to start planning for your future investments today click the link below for a free strategy call to discuss financing options you can use to invest in Newfoundland real estate.
Newfoundland Real Estate: New Name, New Opportunity
Situated at the far eastern end of Canada, the province of Newfoundland and Labrador is one of the country’s smaller areas. It is ranked 10th out of the 13 provinces and territories when it comes to the area and contains just over 4 percent of Canada’s overall population.
Originally named just “Newfoundland”, the province’s name was changed in 2001 to better unify the two landmasses of Newfoundland and Labrador, separated by the Strait of Belle Isle, which is just nine miles wide at its narrowest. However, many people still call the province “Newfoundland” as a common short-hand. Newfoundland was also an independent dominion of the United Kingdom until 1933 when economic devastation and social fallout from World War I caused it to join Canada.
The province’s unique name of is a combination of Henry VII commenting on it as the “New Founde Launde” when John Cabot became one of the first Europeans to land there, while the “Labrador” part is less certain – it could be based off the name of an explorer, or from “llavrador,” the Portuguese word for a landowner.
The province still boasts a healthy First Nations population, making up around 9 percent of the province’s population and mostly identifying as First Nations, Métis or Inuk (Inuit). The province is a beautiful place full of diverse and lively people and investing in Newfoundland and Labrador should be an attractive option for most real estate investors and residents.
It can also be noted here that the province takes its sports very seriously. Ice hockey is extremely popular, as it is across Canada. Junior teams dot the province, contributing many players to the National Hockey League, and the Newfoundland Growlers brought ECHL hockey to the province in 2018.
Key Demographics of Newfoundland and Labrador
One of the most important things for any real estate investor to assess before buying property is the demographics of the region to ensure that the properties they buy are in demand.
Investing in Newfoundland real estate should also include a thorough understanding of its peoples and culture. As was previously discussed, Newfoundland and Labrador is the home of a significant First Nations population, and the population maintains a strong presence in the government, culture and heritage of the area. Also, the province boasts high percentages of people of English, Irish, Scottish and French descent, as well as many other nationalities from across Europe, Asia, Oceania and the rest of the world.
The province also boasts a population of around 8,000 immigrants from other countries, with most arriving from the United Kingdom or the United States. Unfortunately, Newfoundland and Labrador get the short end of the stick when it comes to interprovincial migration.
Many young Newfoundlanders have left the province in recent years in search of better economic opportunities, leading to a net decline in interprovincial migration over the last decade or so. This statistic tends to ebb and flow, however, so investing in Newfoundland and Labrador could still very well represent a stellar opportunity for the right investor.
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The Economy of Newfoundland and Labrador
Investing in Newfoundland and Labrador of course requires a solid understanding of its economic fundamentals, challenges and opportunities. The region had experienced a depressed economy for many years, especially following the collapse of the cod industry, but sustained and thorough investment in the province has led to several economic turnarounds.
Service industries such as financial services and health care are the dominant economic driver, while industries like resource extraction (mining and oil production) and printing are also large employers of province residents.
Newfoundland and Labrador still maintain a hold on traditional industries however, with 20,000 people still employed by a fishing industry that is among the country’s bigger producers of cod, haddock, herring, shrimp, crabs, clams and a host of other fish. Aquaculture is starting to get a toehold here as well, taking over for more labour-intensive and inefficient traditional fishing practices while creating a sustainable source of seafood for all Canadians.
Finally, agriculture and tourism play a big role in the region’s economy. The province’s beautiful sights and natural beauty draw hundreds of thousands of visitors every year, and they spend millions of dollars. Investing in Newfoundland and Labrador should include an understanding of these economic drivers, particularly the tourism aspect, as the proliferation of rental properties (especially short-term ones) could be worth looking into further.
Income Statistics of Newfoundland and Labrador
Going hand in hand with the economic outlook for any province or area is an understanding of the income statistics of its residents. Newfoundland and Labrador are interesting in this sense because their per capita GDP closely mirrors the Canadian average, as does its market income per capita. Investing in Newfoundland and Labrador means investing in a province that reflects Canada as a whole in many ways.
When it comes to median annual family income, Newfoundland and Labrador are closer to the bottom than the top of the charts. The province has a median annual family income of around $80,000 as of 2017, putting it just in the bottom half of provinces.
Investing in Newfoundland and Labrador likely means that you are tackling a challenging proposition. In some ways, the province has provided economic opportunity for many of its people, especially via the extraction industries like oil and gas production.
However, it is not an exceedingly wealthy place, so if you have stars in your eyes about renting out luxury condos or expansive (and expensive) pieces of land to the rich and famous, then investing in Newfoundland and Labrador could potentially not be the right fit for your portfolio. In the meantime, if you are looking for long-term cash flow, Newfoundland real estate holds a lot of potential.
The Newfoundland Real Estate Market
Investing in Newfoundland and Labrador also requires a substantial understanding of the Newfoundland real estate market. The COVID-19 pandemic has contributed a lot to the current landscape, as it has with virtually all other provinces and areas of the world, but things have begun to rebound.
Total sales in the province in April 2020 declined by over 19 percent from the same period in April 2019. Today however, the market is much stronger.
If you do your homework, investing in Newfoundland and Labrador could prove to be advantageous so long as you’re staying safe and doing your due diligence on all potential purchases. During the period noted above, home prices in April 2020 were, on average, about 1.6 percent lower than they were in April 2019, with an April 2020 average of around $236,000.
This kept pace with the national average, if not slightly surpassing it, which saw a decline of about 1.3 percent in April 2020 as compared to during April 2019. Additionally, the number of listings saw a significant decline of around 64 percent during the month-long periods.
By 2022, the average price had risen to about $291,000, signaling a return to growth for investors.
If you’re looking to acquire a rental property, for example, you might find a motivated seller who is not quite finding the pool of buyers that they were hoping to during normal times. In that sense, you have the potential to get a good deal on the property by presenting a qualified and thorough offer that the seller will have to take seriously due to the diminished selling prospects.
Best Places to Buy Newfoundland Real Estate
The province’s largest city, which is also its capital, is a great place to start. St. John’s is a city of around 110,00 seated on the Avalon Peninsula. The city is the oldest post-Columbian European settlement in North America, so you can rest assured that it’s not going anywhere anytime soon. Furthermore, it’s experienced a bit of an economic resurgence over the past decade or so as new ways to connect its coastal heritage to a modern economy have emerged.
St. John’s economy took a hit in the 1990s when the Atlantic cod fishery essentially collapsed. Many coastal communities that had relied on fishing for jobs and income for generations were hit hard, and St. John’s was unfortunately no different. The city’s population stagnated as people left for other provinces that had better connections to modern industries.
This has changed in recent years, particularly with the growing importance of the energy industry. Today, companies seeking oil and gas underneath the ocean have set up shop in town. Companies like Chevron, Husky Energy and Suncor Energy all have a big presence in the city, and it’s also the headquarters of ExxonMobil Canada. These companies have well-paying jobs (St. John’s has the second-highest per capita GDP of any Canadian city) that draw people to the region who will then require quality housing, which can represent a real opportunity for Newfoundland real estate investors.
The city is also a cultural hotbed for the entire region. Sports play a large part of life here, with many junior and professional hockey teams. Professional basketball and amateur rugby teams also are based in the city, so there’s always a game to catch if sports are your (or your tenants’) thing.
Other cultural offerings abound here, drawing in families and young couples who want to set up roots in the city. Museums and national historic sites are all over the place, creating many recreational opportunities for residents of St. John’s to enjoy.
As far as the Newfoundland real estate market goes, St. John’s was not immune to the effects of the COVID-19 pandemic. The market stagnated in the early part of 2021, but prices have started to creep back up as people re-enter the housing search, culminating in a relatively stable market in 2023 at the time of writing this article.
The city of Mount Pearl drives home just how small Newfoundland and Labrador is. While it’s the second-largest city in the entire province, it has a population of just over 23,000 and is part of the St. John’s metropolitan area. Originally a summer destination for the affluent members of St. John’s society, the city soon grew its own roots thanks to economic and industrial development that allowed it to sustain a bigger year-round population.
Mount Pearl maintains this type of appeal to many people with its status as a community that’s tied to St. John’s while maintaining its own independent feel. It’s not uncommon for people to live here and commute into the capital, which means that for Newfoundland real estate investors there’s the chance to find properties that people are willing to pay for if it means the right fit for their lifestyle.
Like St. John’s, and most Canadian cities and towns, the coronavirus pandemic affected sale prices, but they have largely rebounded. After hitting a five-year low average sale price of $223,000 in the first quarter of 2021, the market then began surging, with average prices meeting the $272,000 mark by late 2021 and showing signs of further climbing today.
Inventory is also on the rise after the pandemic essentially crippled it. After seeing home sales hit the single digits at the beginning of these uncertain times, those numbers have skyrocketed. It’s not uncommon now to expect a quarter with dozens of home sales, so if you’re looking to invest in Mount Pearl, now is the time. Expanding inventory coupled with rising prices across the Newfoundland real estate market means that if you strike while the iron is hot, you can expect to find real value.
Other Towns to Consider in the Newfoundland Real Estate Market
Newfoundland and Labrador have several towns outside of the St. John’s region that are worth considering for Newfoundland real estate investment. Conception Bay, for example, has had a market that has historically kept a very steady rate of growth, which can be appealing for more conservative investors. While you probably won’t strike it rich there, you can count on a property that will likely hold its value, achieve steady growth and offer a consistent piece of any portfolio.
Newfoundland real estate is seeing similar recovery to other parts of Canada as the country continues to battle its way out of the coronavirus pandemic. Inventory and prices are on the rise across the board as buyers and renters who were unable or unwilling to move during lockdown periods are now broadening their horizons, and the province is a good destination to explore for those who want to look beyond the major bustling cities of bigger provinces.
Investing in Newfoundland and Labrador: A Summary
Every province in Canada represents unique investment challenges and opportunities that investors can weigh. The real estate market in Newfoundland and Labrador is special and unique in a few ways. The province has been rocked by COVID-19, as have most other parts of Canada, which has contributed to instability in many areas of the economy.
To be certain, the Newfoundland real estate market is not free of this instability and has probably felt it harder than many other industries. Investing in Newfoundland and Labrador, as with investing anywhere else during this pandemic period, means going in with your eyes wide open about the potential risks.
That said, it also means going in prepared to find value and opportunity when it comes to Newfoundland real estate. It is solidly a buyer’s market here, and likely projects to be so for quite some time, or at least until uncertainty among all participants starts to diminish. The projected return of stability to the Canadian overall market should be seen as a strength, however, and investing in Newfoundland and Labrador could be the right fit for you if you can stomach the slow growth that we are likely to see for a while across the country.
A buyer’s market like the one that exists across the province right now can safely be seen as a chance for Newfoundland real estate investors to make their marks. If you’ve been considering jumping into the market in Newfoundland and Labrador, this could be a great time to do so.
Despite the low inventory that we’ve seen coming on to the market, the properties that are available for purchase are being sold for less than they were a year ago. Newfoundland real estate investors who are willing to accept some risk should strongly consider investing in Newfoundland and Labrador properties, as we are confident that they represent good value and reasonable potential for growth.
Newfoundland Real Estate
We have searched high and low for Newfoundland real estate professionals. Below, you can find professionals we have researched and can confirm they specialize in working with Real Estate Investors.
To ensure the maximum success in Newfoundland real estate, or any city, you should always use professionals who understand and work with investors, your income depends on it.
This list may not fully list all the professionals in the area, but the ones we have personally investigated and that we would refer our clients to.
If you’re a Newfoundland real estate professional and would like us to consider adding you to the list, please contact us.
As well, if you would like to learn more about financing options for Newfoundland real estate, click the link below for a free strategy call to discuss connecting with lenders that serve the Newfoundland real estate market.