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East Coast Outlook Upbeat Despite Slower Starts

By Ann-Margret Hovsepian

A late-August Hay Group survey reveals that Atlantic Canada has posted the nation's highest year-over-year increase in salaries and "is entering a strong growth phase." At 3.5 per cent, this increase is half a percentage point higher than last year's. It's also the first time Eastern Canada has had a higher wage increase forecast than Ontario and Quebec.
In a region where the natural birth rate is negative, any good news for Atlantic Canada's economy is welcome. Though Western Canada continues to post the strongest growth in the country, a BMO Capital Market Economics report points out that one trend seeing a reversal is the flow of migrants. "Net interprovincial migration to Alberta hit a record 58,200 people in 2006, with many leaving Atlantic Canada in search of high-paying jobs," the report states. "However, late-2007 saw a sharp reversal in this pattern, with Alberta recording its biggest quarterly outflow since 1988 and Atlantic Canada experiencing in-migration and accelerating population growth. With a number of construction projects on tap, Atlantic Canada could be at risk of facing its own skilled labour shortage, making for some interesting competition for workers between the West and East."

Starts Expected to Decline
Single home starts in Atlantic Canada saw a small improvement in the first six months of the year, but not enough to bolster overall starts. According to Canada Mortgage and Housing Corporation (CMHC), new home builders in New Brunswick, Nova Scotia and Prince Edward Island should expect a moderate decline - about 6 per cent - in housing starts for 2008. Only Newfoundland and Labrador is expected to see an increase in starts - also about 6 per cent.
"After a long hard winter, people were wondering whether they should be confident," says SUZANNE BONA, president of Scotian Homes in Enfield, Nova Scotia (see profile on page 16). "Consumers were a bit hesitant for a while but things have started to move again this month. We've all been watching the starts and would like to think that the years ahead can be as good as the last few." Bona says that the outlook is still quite good but does expect the market to calm down.
CMHC's expectation for 2008 is that "consumers will be more reluctant to spend, as higher energy prices constrain consumer pocketbooks." Prices for both existing and new homes have risen this year, especially in Halifax and St. John's. According to the Canadian Real Estate Association, New Brunswick's Multiple Listing Service (MLS) sales in June totalled $157,505, compared to $142,734 in the same month last year. Similarly, June sales totalled $150,503 in Prince Edward Island ($134,295 in June 2007), $171,183 in Newfoundland and Labrador ($152,641), and $194,627 in Nova Scotia ($190,782).

CMHC expects the higher prices to push consumers toward row and semi-detached units instead of more expensive single-detached homes. "This is a reflection of the urbanization taking place across the country," says Bona, adding that many multi-unit projects are underway in Halifax metropolitan area. "As the population ages, people need to be closer to healthcare or to their children who are in town."

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