SASKATOON – The pace of new housing starts over the next two years is expected to moderate over concerns of higher inventory and slower employment growth.
Canada Mortgage and Housing Corporation (CMHC) made the forecast in its fall housing market outlook.
Total starts are expected to reach 3,300 in 2014, up 11 per cent from 2013. The outlook for the following two years are 3,125 and 3,050 units which are still among the highest levels in the last 30 years.
Goodson Mwale, CMHC’s senior analyst for Saskatchewan, says the slight downturn is due to a number of factors.
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“There is a risk of higher inventory in the months ahead,” says Mwale, pointing to a faster pace of starts in 2014 and construction rising to a 34-year high.
“With slower employment growth and lower net migration also expected through 2016, this will have a moderating effect on housing starts in Saskatoon over the next two years,” he added.
According to Mwale, multi-unit starts will outpace single-detached starts in 2014, which will continue into 2016.
“This will mark the first time in 10 years that multi-family starts will have surpassed single-detached starts,” stated Mwale.
Mwale points to declining multi-family inventory and an increase in demand for lower-priced options such as condominiums and apartments as factors for increased starts.
On the resale side, CMHC expects 5,800 MLS sales to take place in 2014, an increase of 4.6 per cent from the previous year.
Sales are expected to climb to 5,835 in 2015 and edge slightly higher in 2016 to 5,875.
Resale prices are also up, with the average MLS price projected to rise 2.8 per cent this year to $341,300 with similar gains expected over the next two years.
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