Overbuilding still a concern in Saskatoon’s housing market

New housing starts in Saskatoon continue to trend downward in 2017 according to Canada Mortgage and Housing Corporation (CMHC).
CMHC said there continues to be high evidence of overbuilding in Saskatoon’s housing market. File / Global News

A moderate degree of vulnerability remains in Saskatoon’s housing market, according to the Canadian Mortgage and Housing Corporation (CMHC).

The federal agency said Thursday in its fourth quarter housing market assessment there is high evidence of overbuilding in the market.

CMHC said the inventory of completed and unsold units remain slightly above the threshold, and although new housing inventory has declined in recent months, it is not enough to change its assessment.

READ MORE: Home prices in Saskatoon continue to decline

It also noted the rental apartment vacancy rate of 9.6 per cent in October 2017 was above the critical threshold of 7.47 per cent.

“Based on these two indicators, the assessment of high evidence of overbuilding in Saskatoon’s market was maintained,” said the agency in its report.

Story continues below advertisement

CMHC said Saskatoon remains a buyer’s market, resulting in downward pressure on prices.

The average price declined to $327,900 in the second quarter of 2018 from $330,600 in the previous quarter.

READ MORE: Single-family housing prices remain flat in Saskatoon during September

“Fundamentals remain mixed with weaker economic conditions resulting in a contraction in real personal disposable income, while positive growth has continued in the young-adult population,” said Goodson Mwale, a senior analyst with CMHC.

“In addition, buyer’s market conditions in Saskatoon have perpetuated a downward trend in several house price measures.”

The housing market report also found the benchmark price for apartment units declined in the second quarter, and was significantly lower from a year ago.