Rising interest rates not expected to dampen Nunavut house prices

Territory’s housing shortage plays a bigger factor in cost, says Iqaluit bank manager

The rising cost of construction materials has slowed housing builds in Nunavut. (Photo by Mélanie Ritchot)

By David Lochead

Higher interest rates will not have a big impact on Nunavut’s private housing market because there is still high demand for homes and so few on the market, says the Iqaluit branch manager of the First Nations Bank of Canada.

“There isn’t one community that has enough housing to support their population, whether it be public, social or private,” Kathleen Gomes said.

In Iqaluit, a three-bedroom house was recently listed for $718,000.

In other parts of Canada, where there are more homes available to buy, interest rate hikes should eventually cool homebuyer demand, said Gomes.

But the situation is more complicated in Iqaluit, she said. Not only is there not enough housing, but the city needs another water source to accommodate the amount of new construction needed to support its growing population.

Robert Hogue, a senior economist with RBC, said his bank believes the Bank of Canada will raise the interest rate three times in 2022, with each rate hike being at 0.25 per cent. Higher interest rates will mean higher mortgage payments for homeowners and potential buyers.

Over 3,000 new housing units are needed to accommodate the housing demand in Nunavut, according to a report by the Government of Nunavut.

With the territory’s dire need for housing, the Nunavut Housing Corp. is more focused on building public housing than supplying the private market, said NHC chief operating officer Stephen Hooey.

Hooey said the NHC is planning on building approximately 50 housing units or more this year.

Additional funding programs can increase the amount of housing built, Hooey added. He gave as an example the $4.9 million in housing funding given to Nunavut by the Canadian Housing and Mortgage Corp. last summer.

In a typical year, the NHC would build approximately 80 housing units, Hooey said. But the rising cost of labour and building materials means the NHC does not have the budget to build as much this year.

Part of the reason the NHC cannot afford to match the rising costs of homebuilding is because it is on a fixed budget that was set when inflation was at a stable two per cent. But inflation has risen dramatically in recent months, with Statistics Canada finding that the consumer price index rose by 4.7 per cent year-over-year in October. That’s the highest it’s been since 2003.

Hooey said the NHC is looking to talk with its partners, such as the CMHC, to see what additional funding programs it can access to address the higher cost of building.

If inflation and interest rate both climb, that will also put stress on Nunavummiut homeowners, Gomes said, through higher mortgage payments and lower savings due to the cost of necessities such as gas or food going up.

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(10) Comments:

  1. Posted by Stop Social Housing on

    Providing 85% of housing to social housing is poor policy. This needs to stop. The Government of Nunavut does not having an obligation under the Nunavut Act or the Land Claim to supply housing, so stop. Housing is not an entitlement. Build more staff units and require people to go to work if they want a house. Transition the staff housing over time to sale to the staff (the GN program for this in Iqaluit has completely failed – it has been years and they will not finalize the transfer of a GN condo to me). There is no accountability in the GN for these poor decisions.

  2. Posted by Get your pitchforks on

    I sold my 3 bedroom house in a quieter area of town for close to a million. It’s insane but that’s the market right now due to the incompetence of our municipality. Someone walked up to me and offered a sum. I said no, but then the unsolicited offer kept going up until I couldn’t afford to say no.

    As sad as the housing crisis is, I can’t help but laugh at the usual folks on facebook on witch hunts against home owners selling their houses at market prices.

    This Facebook mob includes A CURRENT CITY COUNCILLOR who dragged a fellow citizen through the mud for selling their house at a market rate. He then proceeded to sell his house for what he called a great bargain, even though it was still very expensive and he made a huge profit on his house.

    Anyway, I hope things improve in Iqaluit. This can be a nice town, filled with good people. But it’s turning into a mini Alberta filled with roughnecks. Until that changes I won’t regret leaving.

    • Posted by Torch bearer on

      That whole debacle was pretty entertaining. The only reason I keep twitter is to read the verbal diarrhea from Kyle and others 🙂

  3. Posted by Larry on

    Perfect examples why home ownership is only for the elites in Iqaluit, think of the rest of Nunavut where there is no way in their young lifetimes they will ever own a home. GN housing policy’s, local hamlet bylaws and crazy municipal bills, power Corp, and if you happen to be ambitious enough to work at a mine you have to pay between 12-17 hundred a month and the welfare person and drug dealer and bootlegger next to you pays 60 dollars a month. Why even try , and all the politicians say every time we need more money from the federal gov.and try to get a contractor to build one for you outside the Hubs good luck, nobody up here can think outside the box. Gimme, gimme does not get

  4. Posted by Tips? on

    I want to buy my own house but I’ve never been taught how to go abouts purchasing a house. The houses on the market here are too small for my family size.
    If I wanted to build from the ground up what are the options? Cheaper? More expensive? Than buying already built house?
    Can they have the HAP program back?

  5. Posted by Frank on

    Almost 40-years ago I took my savings from two decades of work, bought some material and built my own house in a small community in Nunavut. We’ve lived in it ever since. It’s expensive to up-keep but not nearly as much as it would be to rent a decent home from the Housing Corp. My wife and I know how to economize: municipal services $60 per month, electricity $110, property tax zero, heating $300. We’re being gouged on the insurance and land lease but we have to take the good with the bad. I’d do it all again if I was still 35!

  6. Posted by Salinat on

    What nobody talk about is the limited infrastructure that is pulling back development. For example Rankin is considering putting a moratorium on new housing construction because the existing water and sewer system and QEC power supply cannot support any further development. Nunavut needs to expand a lot infrastructure such as potable water supply stores, landfill sites, sewer systems, water distribution systems, power supply.

    • Posted by Iqaluitmiut on

      Iqaluit is not far behind this situation. Trucked services are already maxed, to the point they refuse any new businesses who try to build in trucked services area. Utildor is not much better with the constant breaks and repairs on going all year long. Our water supply was already in crisis before they starting flushing the lines for fuel smell, I can’t imagine how bad it is now for council to appeal for an alternate water source. I don’t see how Iqaluit can really approve any more buildings when we are stretched to the max as it is.

      And add to it the not 10 year old power plant that is in dire need of repair now.

  7. Posted by uvagut on

    as stated previously perhaps a look at the assistance given to non homeowners vs homeowners is one start
    others are such topics as lack of developed land
    other reasons besides greed, etc.? let’s keep this positive and helpful !

  8. Posted by Homeless in Nunavut on

    Some people think that you need a house in order to live.
    But many hundreds of Nunavummiut know that that is not so. They know that people can live without houses. They know, because they are doing so, and have been, for a very long time. The official nuber was 1200, but that was about 10 years ago. The real number today is probably well over 2000.
    There are even GN employees who are homeless.

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