When the budget comes… #nlpoli

We’ve got a provincial government in Newfoundland and Labrador that has been budgeting for years to spend more than it brought in.

Way back in the beginning, way before the oil money cut in suddenly and largely unexpectedly,  Loyola Sullivan said that people should expect the Conservatives to run deficits annually of half a billion dollars or more.  The logical implication of what he’d said in 2005 was that it might have been 2014 until the Conservatives balanced the budget.

Now to be fair,  Sullivan was speaking about the magnitude of the provincial government;s financial problem as he and his colleagues found it in 2004.  But at the same time,  by 2005,  we were also talking about how the Conservatives intended to run things themselves. 

They were clearly not as concerned about public debt as they had been in 2003.  Part of that might have had something to do with this idea they had of making a killing selling cheap electricity into the United States, but frankly,  Sullivan’s forecast of a debt of about $17 billion – which the Conservatives delivered on – suggests they really had something else in mind. 

Always read the large print #nlpoli

The Conference Board of Canada released a report last week that assessed economic performance in each of the provinces in Canada.

“The resource-driven economies of Alberta, Saskatchewan and Newfoundland and Labrador can boast A+ grades for their economic performance,” read the first sentence of the news release accompanying the report, titled How Canada Performs: Economy.

Amazing stuff and more than a few people  - most likely provincial Conservatives – stuck their chest out in pride.  They should have read the big print in the report.  The first sentence is more than a wee bit misleading.

The Consumer Economy #nlpoli

It’s the sort of thing that leaps out at you. 

As SRBP mentioned on Thursday, in her book Shopping for votes veteran political reporter Susan Delacourt put it in stark terms. Consumer spending has accounted for 60 to 70 percent of American gross domestic product since 1980.  In Canada, it’s been more like 52 to 58 percent nationally. “So when politicians say that they are focused on the economy,” Delacourt wrote, “what they often mean is that they are focused on getting Canadians to buy stuff.”

Well, here’s a pretty chart to give you some local figures.  They come from Statistics Canada CANSIM 384-0038 showing gross domestic product based on expenditure, in constant 2007 dollars.

Annual GDP Change #nlpoli

A release on Friday from Statistics Canada showed that the provincial economy shrank by almost 5% in 2012.  They even supplied a lovely chart to illustrate the GDP changes in each province as well as the national average.

This wasn’t just modest growth or even a  modest drop.  We are talking one of only two provinces with a drop in GDP and the biggest change – positive or negative – of any province or territory in Canada. 

Alberta is even more dependent on commodities than Newfoundland and Labrador and it still managed to see gross domestic product grow by almost four percent.

Not so in the former Republic of Dannystan. 

Down.

By almost five percent.

 

Funny how things come together #nlpoli

First, there’s a new post at the Monkey Cage that notes a discussion in economist circles about public discussions of economic subjects:

… economics lost communication with policymakers and practitioners leaving room for all sorts of “charlatans and cranks” to fill the void. In doing so, academics ceded important ground to think tanks aligned with one party or the other, to self-appointed economic experts, to business economists maximizing profit rather than public knowledge, and to a media that doesn’t always comprehend the economics that underlie a particular issue.

Second, there’s a short piece in the Telegram that torques the latest Statistics Canada labour force stats:

Newfoundland and Labrador is bucking the national trend, adding jobs in October, even after the rest of the country faces higher unemployment.

The bucking of the trend thing is zero point nine percent year-over-year.  Not necessarily something to write home about, especially considering the national decline the story runs with is actually an increase in employment of 1.2% year of year as well.

One month decline nationally but a year over year gain.  Growth provincially month-to-month and year-over-year.

Unfortunately that doesn’t fit with the accepted narrative of the economic miracle that is Newfoundland and Labrador these days, supposedly.

Third, as if to confirm the generally poor understanding of things economical, there’s the text of a speech Premier Kathy Dunderdale gave to an energy forum in the United States.  It includes copious references to the economic miracle thingy, along with a raft of other completely  - and demonstrably - false claims about Muskrat Falls.

Fourth, there’s a piece in the Atlantic Institute for Market Studies blog that  - purely by coincidence - takes up the economics ignorance theme and relates it to a politician who thinks a remittance economy is a good thing.

Fifth and for those who don’t know, that economic miracle thingy in Newfoundland and Labrador has been built in large measure on shipping workers outside the province and having them ship their paycheques back home. You can get a sense of that, and some of the previous discussions of this from a post at SRBP back in December 2008.

There are parts of the province that are almost entirely dependent on migrant labour and remittance workers.

In others - like Stephenville - the economic disaster of losing a pulp and paper mill on the Premier's watch didn't materialize solely because the workers there could find jobs in Alberta.

But yes, you say, there has been more people coming back to the province since 2007, you say.

At the time, they were coming back in advance of the huge recession.  Just as surely they started heading out again as the economy picked up again in other parts of the country.

Sixth, flip back to that first post on economists and public commentary.  Follow the link back to the original article.  There’s a fascinating discussion about the use and misuse of economic arguments and models. 

Just for the fun of it, then, consider:

• the amount of media coverage the most recent pronouncement by a certain economist on the Hebron project even though it was nothing more than an update of previous assumptions using new assumptions and that they are all – wait for it – assumptions.
• Note, in particular, the references to the relatively better prospects for Hebron  - heavy sour crude in a highly fractured structure - compared to Hibernia, lots of light sweet crude and a fair bit of natural gas. Despite the fact that Hibernia will generate more than double the economic benefit to the province in terms of royalties over its lifespan than Hebron – even using the most recent assumptions – the lesser of the two is apparently worth more.
• Of course that sort of conclusion has nothing to do with the fact that the same economist criticised Hibernia when it occurred and that his old predictions of horror never showed up, in practice.  In no way could his previous, dubious predictions or any other non-economic consideration have in any way influenced his most recent assessment of relative gloriosity for Hebron.
• It’s not like the guy has made some boner projections based on knowledge he acquired from his consulting work for the provincial government and its agencies. Sure he’s talked about debt problems that the provincial government folks might not like but he avoided a discussion of Muskrat because he’s been doing some consulting on the project.
• And it’s not like his public comments for different audiences haven’t sometimes crossed each other much to his embarrassment.
• The one guy has a colleague who has also been known to produce some ideologically tainted bits of commentary.

The media’s relationship to economists is almost as bad as their attachment to the equally dismal science of the pollsters.

But what is truly remarkable here is the way a whole bunch of economist related stuff wound up appearing in different places for different reasons in the same week.

And it all ties together.

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Experts warn of external threats to recovery

Along with population statistics, here’s another one you can bet the current provincial Conservative crowd won’t be holding out quite as enthusiastically as the fabricated version of Bank of Canada' governor’s remarks they were using until recently.

As the Globe reported:

Top policy makers indicated Wednesday that they are on heightened alert for a deeper crisis in Europe that spreads beyond Greece and, potentially, hurts Canadian banks or the wider economy. Though the direct exposure of Canadian banks to countries such as Greece is low, the Bank of Canada warned that Canada’s financial institutions are vulnerable through links to the United States and other countries that are much more exposed.

Those top policy makers include analysts at the Bank of Canada and federal finance minister Jim Flaherty.

The question that remains is what economic problems in the United States and Europe would do to demand for oil – our new chief export – and other commodities as well as what it might do to prices for them as well.  Anything that drops the price and the demand will also drastically affect provincial government revenues.

That won’t be good on a go forward basis, to use another of a recently famous politician’s famous phrases.  Since the provincial government doesn’t even have an imaginary protective bubble this time, that could make what one analyst forecasts as a bad deficit and debt situation get much worse.

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Harris Centre economic forum: the media coverage

The Telegram’s James Macleod had a decent front page summary of the Harris Centre’s discussion of economic issues facing the province and the subsequent discussion.

The CBC has a super short version that is already bumped off the front page of its website in favour of stories like one on a baby bear in Terra Nova park, a batch of fake 20s making the rounds on the northeast Avalon and an earth-shattering story about two idiots who stole metal for scrap and found out it was worth more than they thought when they wound up in court for the theft.  Talk about if it bleeds, leads.

Anyway, for those in tune with evidently less important issues – how does an multi-billion dollar economic mess compare to two scrap metal dorks? -  Wade Locke’s presentation isn’t on line yet but here is the slide likely to be causing a few stomach’s to turn in knots. 

It’s Locke’s deficit forecast based on current trends and current government policy:

Within a decade the current account deficit will be running at record levels if the current administration carries on with its policies. We can expect more of the same from the incumbents since finance minister Tom Marshall is already trying to pretend that the mess doesn’t exist or that he has things under control. 

Unfortunately for the rest of us,  it does and he doesn’t.

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The looming debt problem

The government’s favourite economist is sounding alarm bells about the provincial government’s financial health.  The finance minister, on a local talk radio program, sounding stressed as more and more people start talking about what has been obvious to readers of this corner for some years now:  the provincial government is in a financial jam and the current crowd running the place have no idea what to do about it. 

Well, if they do have an idea, they have no intention of doing anything, at least within the next four or five years.

Part of the charade they’ve been relying on the past few years is the perception that not only are happy days here but they aren’t ever going to leave.  In some years, the finance minister hasn’t been above presenting completely laughable forecasts during the Christmas season to keep consumer spending going through one of the most tax-rich seasons of the year.

Just as the proverbial chickens are coming home to roost in Tom Marshall’s office, it may not be too much longer before a fewer fowl start fouling other bits of the province.

Last week local news media mentioned a report on consumer debt.  Newfoundland and Labrador saw the largest jump in the country last year – along with Quebec – at 7.8%.  As CBC reported, the average consumer in the province owes $23, 372. That doesn’t include household mortgages.

Flip back to March and you’ll find a red flag on that issue. It was a report by the Bank of Montreal that warned Canada’s housing prices were getting perilously close to a “correction”: especially in places where prices were outstripping incomes or if inflation rates changed rapidly.

Marketwatch.com’s Bill Mann summarised it this way:

The cautionary Bank of Montreal report  says average home resale prices compared with personal incomes are 14 per cent above the long-run trend, up from last summer, although still below the 21-per-cent peak that preceded the 1989 crash.

But that is not the case in all Canadian real-estate markets. Five provinces are currently in the danger zone, led by Saskatchewan, where the ratio is 39 per cent above historic norms. That province has a booming commodities industry, centered around potash and oil.

Also well above the long-run levels is Newfoundland, 34 per cent higher; British Columbia and Manitoba, 31 per cent, and Quebec, 23 per cent above.

Overall in the province, debt servicing costs are the lowest in the country according to the most recent report from the Certified General Accountants Association of Canada. But that doesn’t mean there aren’t pockets of risk.  The CGAA also reported that incomes in the province fell short of previous growth:  problem is the year they are referring to isn’t clear, even though the report was issued in 2010.

Just thinking about it for a second, one could easily imagine there are a couple of potential hot spots in the province.  The northeast Avalon and western Labrador are experiencing particularly strong growth and that’s where you’d be more likely to see heavy debt loads and high debt to income ratios.

Not surprisingly, personal debt is one of three issues Bank of Canada deputy governor Jean Boisvin, right, highlighted in a speech in March that Canadians needed to watch as the country emerged from the global recession:

Let us start with household debt. Since the beginning of the recovery, household credit has increased at twice the rate of personal disposable income. In the autumn of 2010, Canadian household debt climbed to an unprecedented level of 147 per cent of disposable income (Chart 7).

The relatively healthy financial condition of Canadian households at the beginning of the “Great” Recession helped the Canadian economy to better withstand the initial shocks of the crisis. However, going forward, it is essential to maintain the necessary room to manoeuvre to keep household spending on a viable path. This leads us to believe that the rate of household spending will more closely correspond to future earnings, and certain signs to that effect have already been observed.

Here’s Chart 7 from the speech:

The other two issues were international competitiveness and productivity and investment.

There’s a parallel between the condition of the provincial government’s books and the household accounts in some areas of the province. Just as the provincial government has grown increasing susceptible to small shifts in economic circumstances, so too may more and more households in the province be vulnerable to shifts in the provincial economy.

If the province’s politicians scarcely recognise their own financial problems, it makes you wonder if they might be aware of the issues looming for consumers in the province.

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Locke warns of financial problems

Wade Locke’s been making the rounds of local media in advance of his talk tonight at the Harris Centre of Memorial University.  Your humble e-scribbler posted the details of it on Monday.

Some quick observations on this Telegram version:

1. There is nothing new in Locke’s presentation that hasn’t been in the public domain  - in some cases – for a couple of decades.
2. That said, the fact that the government’s favourite economist is now undermining the economist’s favourite government might be enough to get these issues into wider discussion.
3. Once that happens it should be fairly obvious the current crowd have helped shape the current mess and their intention is to make a bad situation even worse.
4. Locke’s solution – we need a plan – is a penetrating insight into the obvious. The current crowd got us into this mess precisely because they had no plan.
5. Unfortunately, there’s no sign of any pressure to create a plan in the near term.
6. Politicians – like some of the people on the panel with Locke tonight - will continue to deny there’s anything here that needs attention.  others, like the current administration will talk about doing something constructive and then either do nothing or make the situation worse.
7. There’s no sign any of the political parties in the province are ready to deal with the provincial government’s financial mess.

Put all that together with the volatile political environment and you have the potential for one of the most dramatic political years in the province’s history.

- srbp -

Building permits down in April

The value of building permits issued in the province in April fell by 16% compared to the same month in 2010 according to information released on Monday by Statistics Canada.

Permits in April 2010 were valued at $94 million and $79 million in April 2011.  permit values in February 2011 were more than $85 million and $61 million in March 2011.

Building permits in St. John’s were up for the second straight month.  However, April permits were down 8.6% compared to April 2010.

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Economy not sizzling in Tom Marshall’s home town

Finance minister Tom Marshall has always had a curious relationship with reality.

He likes to talk about debt reduction, for example, but he never really does anything about it, or as in his plan for Muskrat falls, he actually wants to increase the public debt by upwards of 50% of its current size.

When Marshall delivered the most recent budget – and set a record for public spending in the process – he told reporters that “our economy is sizzling right now.”

Tom must be referring to Bermuda or Barbados or wherever it is he takes the sun during the colder months.

He certainly isn’t talking about his own district of Humber East.

The Western Star reported on Thursday that the major container line serving the province is dropping Marshall’s home town of Corner Brook from its destinations.

Capt. Sid Hynes told The Western Star Thursday afternoon that export freight from Corner Brook has dropped by around 70 per cent and imported cargo has declined by about 30 per cent in the last five years.

Exports down by 70%.

Imports down by 30%.

Since 2005.

Now it surely doesn’t take an expert to tell that this is not an economy that is sizzling.

Anyone who claims it is sizzling might be fried though.

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No Muskrat Falls in BMO forecast

Curiously, BMO’s latest economic forecast for the province doesn’t include any reference to Muskrat Falls.

The bank’s economists forecast overall economic growth in the province of 3.,9% in 2011 driven by provincial government infrastructure spending totalling $5.0 billion “over the next several years.  BMO says that the province’s capital spending hit 3% of the province’s gross domestic product in 2010.

BMO forecasts continued strong capital spending over the next three years.  While the bank mentions Hebron, Hibernia South and Long Harbour, there’s no reference to Muskrat Falls. That stands out like the proverbial sore thumb since the forecast is up-to-date enough to note the change in Conservative leadership late last year. it’s also odd because the forecast of capital spending comes entirely from the provincial government’s figures.

- srbp -

Related:  Labour force indicators raise questions about economic health and competitiveness

Building permits value drops almost 50% in November

The value of all building permits issued in Newfoundland and Labrador in November 2010 dropped 49.3% from the month before, according to figures from Statistics Canada released last week.

The value of non-residential permits dropped 74.5% in the same period while residential permit value increased 4.3%

Those were the largest drops of any Canadian province.

In St. John’s, the value of permits dropped 60% from $149.8 million in October to $59 million in November. Permits in September for St. John’s were valued at $54.5 million.

You can get a better perspective on these figures by comparing them with a post from last December.

The Fragile Economy: finance minister complains about his own policies

Finance minister Tom Marshall thinks its time for the private sector to step in and boost the economy around Corner Brook.

“Other than construction, I would like to see more economic investment; I would like to see more businesses coming in and investing here,” he said. “It is jobs ... What we have seen is government spending, in a massive way, in this area.”

That’s from a story in last Friday’s Western Star.

Two observations come readily to mind.

First of all, that’s a great big “D’uh” there, Tom.  Your humble e-scribbler has been banging out post after post after post over the past six years on this very subject.  The number of posts on it has gone up in the past two years because the fundamental situation is getting fundamentally worse. 

It is getting fundamentally worse – to hit the second point – as a direct result of government policy.  In everything from its energy policy to its disastrous seizure of private sector assets in 2008, the current administration has shown itself to be relentlessly opposed to creating an economic climate that attracts investment, promotes innovation and rewards entrepreneurship. 

The current fragile state of the provincial economy  - “fragile” is a word Tom Marshall used not so long ago, by the way - is a direct consequence of government policies.  Only a fundamental shift in those policies can move the province off the course it is currently on.

As it stands in early 2011, the current administration is firmly committed to continuing the policies that have contributed to putting the economy in its current parlous state.

We have seen the enemy, says finance minister Tom Marshall, and he is us.

- srbp -

Average annual real GDP growth lower since 2003

The province’s real gross domestic product has grown at one third the average annual rate of the period from 1997 to 2003, according to figures compiled by Statistics Canada.

GDP  - the value of all goods and services produced in the province - grew by 3.0% annually, on average, from 2003 to 2008.  But between 1997 and 2003, GDP grew by an average of 8.9% a year.

Labour productivity increased by 6.4% annually, on average between 1997 and 2003.  However, between 2003 and 2008, productivity increased by 2.1% annually, on average.

this sort of concrete information should make anyone think twice about all those goofball commentaries claiming there was something they called the Danny Williams Effect driving the economy to unprecedented heights.

- srbp -

NL posts lowest productivity in Canada in 2009

Figures released on Friday by Statistics Canada show that Newfoundland and Labrador posted the largest drop in labour productivity in the country in 2009.

Productivity fell by 8.7 percent.  The second biggest drop was 4.1% in Saskatchewan. According to Statistics Canada,

Real output was down for the first time since 2004, because of a sharp downturn in oil and metallic mineral extraction. At the same time, hours worked fell by 6.3%, also the largest decrease among the provinces.

Real gross domestic product as down 14.5% from the previous year, but total compensation was up 2.4%, hourly compensation was up 9.4% and unit labour costs were up 19.8%. In each case those figures were the largest for the 10 provinces.  Only the territories saw higher increases in unit labour costs and hourly compensation.

Broken down by the goods and services sector, the figures showed higher losses in the goods producing sector.  That’s consistent with the declines in oil and mineral production in the province.

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The Dismal Science: Debunking the “federal presence” fairy tale

Far from being hard done-by when it comes to federal jobs in the province, Newfoundland and Labrador is pretty much on par, according to a recent study conducted by the Frontier Centre for Public Policy, and reported by the National Post.

You can find a news release summarising the report here, while the full report is available in pdf format.

Some provinces  - Prince Edward Island, New Brunswick, Nova Scotia and Manitoba – have significantly more than the national average number of federal jobs per 100,000 population.  Quebec, Saskatchewan, British Columbia and Alberta have less.

Newfoundland and Labrador and Ontario are only slightly higher than the national average.

The study effectively refutes claims that this province is receiving something less than its “entitlement’ to federal pork spending.  The comparative figures also demolish two reports released by Memorial University’s Harris Centre in 2005 and 2006.  The provincial government has used those studies repeatedly to bolster its claims for increased federal transfers to the province to offset what turn out to be imaginary grievances.

The Frontier Centre study refers to these federal jobs as a form of “stealth” Equalization.  That is, they contend that the federal jobs serve as a type of federal transfer to the local economy in each of the provinces. More importantly, though, the Frontier Centre contends that the transfer comes in addition to the formal Equalization program and is particularly heavy in the provinces it refers to as “major” have-provinces.

The study also notes that the have-not provinces with the highest ratio of federal government jobs also tend to have higher than average reliance on provincial public sector jobs generally. They compare provinces based on the number of public sector employers as a share of the total population.  Newfoundland and Labrador is third highest on that scale, with Prince Edward Island and Manitoba coming, respectively, first and second.

Looking at the same information but as a share of the provincial labour force, Newfoundland and Labrador is by far the province with the largest dependence on the public sector.  Almost 30% of the provincial labour force is employed by the federal, provincial or municipal government.

The Frontier Centre study puts the findings into a particular context, namely transfer payment reform:

The stealth equalization of unbalanced federal employment described in this paper is part of a much bigger problem —an approach to public policy in Canada that transfers money out of high-productivity regions into low-productivity regions.

Not only is this policy approach harmful to our productivity growth, it is also, quite simply, unsustainable. Historically, the taxpayers in three provinces—British Columbia, Alberta and Ontario, have paid most of the bill for high levels of public sector employment in the have-not provinces.

At the same time, the study does point to issues that are especially relevant to Newfoundland and Labrador, even if the report’s authors simply missed the poster child for their argument of unsustainable public spending and the dangers of reliance on what the author’s call “the state driven approach to economic development”.

Most residents of the recipient provinces are unaware of the extent to which their economies are state-driven and reliant on transfers. Beyond the official equalization money, massive amounts of revenue from elsewhere flow into these provinces from a number of different sources. Stealth equalization through federal employment is one important example—but there are others. Higher dependence on federal
government transfers to individuals and discrimination in ordinary  operating programs in favour of the have-nots are two more examples of ways Canadian public policy transfers wealth into the have-nots.

Most residents of Newfoundland and Labrador are unaware of the extent to which the provincial economy is state-driven and reliant on federal transfers in addition to overall public sector spending.

They aren’t alone, of course.  The current provincial administration operates as if going off Equalization was a tragedy of biblical proportions.

- srbp -

Related: 

• Fragile Economy:  staying the course
• Fragile Economy:  reductio ad argentum
• Fragile Economy:  The public sector
• Fragile Economy: …and two steps back
• Fragile Economy: …now three steps back and loving it

Drop-out drop detail

The 2008 report on schools from the provincial education department is a wealth of useful information on one of the most important government service areas.

Chapter 10 is about school leavers.  In light of the Statistics Canada report on drop-outs, it’s worth taking a closer look at the way the drop-out rate dropped in this province.

As we know from the Statistics Canada report, 19.9% of young people dropped out of school in Newfoundland and Labrador, on average, in the three years 1991-1993.  By 1996, that figure had declined to 16.7%.

By 2006, that number was down to 8.9%. The rate was lower in 2003, continued downward for the next two years and then jumped up in 2006. The current rate  - 7.4%  - is actually about what the rate was in 2005. The table is taken from the provincial government report.

Media reports indicate that a higher percentage of males than females dropped out in this province in 2009 (103% versus 6.6%). That’s a change from a decade and more ago when the male rate was dramatically higher.  According to CBC, “while rates have declined for both sexes, the rate of decrease was faster for men, narrowing the gap between the two.”

The provincial education department has another statistic, though.  It compares rural versus urban rates of school-leaving.  Here’s the provincial government table comparing the rates for all provinces and for the country as a whole.

This sort of statistic doesn’t bode well for economic development in rural Newfoundland and Labrador. And it doesn’t get any better when one considers the trend in the Eastern district, for example, that shows those graduating high school in rural areas are more likely than urban students to leave with a general pass.  n other words, they aren’t necessarily more likely to enter post-secondary education or training.

If a provincial government could only focus on one area in order to produce economic and social benefits to individuals and to the community as a whole, improving educational performance would be it.

Now it is interesting to pick up on comments on the other post on this report.  Both noted the possible influence of the cod moratorium in 1992 on the decline.  On the face of it, the answer seems to be that the moratorium did influence the rate.  Young people in rural areas, especially males, tended to leave school since they could make a living in the fishery or other similar work with a limited education.  Without the cod fishery they might have stayed in school.

Maybe.

The idea is worth exploring but the answer is likely to be more complex. Don’t forget that about 70,000 left Newfoundland and Labrador in the aftermath of the moratorium.  While the drop-out rate declined dramatically in the period between 1993 and 2005, the persistence of a high drop-out rate in rural Newfoundland  suggests there might be other factors at work.

Still, these numbers bear further consideration.

Especially considering the literacy and numeracy rates in the province.

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Non-residential commercial investment Q3 2010

From Statistics Canada, the latest numbers of investment in non-residential building construction:

Total construction is up 22.6% from the second quarter and 17% year over year (Q3 2009 to Q3 2010).  Institutional is up almost 30% year over year reflecting the government’s capital spending. Commercial is up 27% from the previous quarter but only 3% year over year.

-srbp-

St. John’s housing market feels national slowing trend

From RBC Economics:

Atlantic Canada’s housing market was not immune to the significant slowdown in activity that has swept across the country since spring. In the last few months, housing resales in the region fell back to the lows reached during the late 2008 to early 2009 downturn. The decline was felt across the board, including areas, such as St. John’s, which were on a tear earlier this year. The cooling in demand loosened up market conditions a little – they were very tight at the start of this year – and restrained home price increases.  In turn, this limited the rise in homeownership costs in the region. Depending on the housing type, RBC Housing Affordability Measures moved up between 1.1 and 1.5 percentage points in the second quarter and remain very close to long-term averages. Overall, housing affordability in Atlantic Canada
continues to be quite attractive and signals little in the way of undue
stress at this point.

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