PST on construction, interest rate increases, and the mortgage stress test are negatively impacting home building permits in Saskatoon, according to a local association.
The Saskatoon & Region Home Builders’ Association (SRHBA) pointed to those reasons as factors for the significant decline in the number of permits issued so far in 2018.
SRHBA said high rental vacancy rates and sluggish economic growth are also impacting residential construction in the city.
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“The market continues to adjust to the higher inventory that came out of the boom from a few years ago, but more importantly, it’s adjusting to a policy stacking issue; several government policies negatively impacting the residential housing market at once,” said SRHBA CEO Chris Guérette in a statement.
“Residential construction can be seen as an unofficial economic indicator, so factors that hinder its growth are also threatening jobs and the economic growth of our region.”
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A report from the Canadian Mortgage and Housing Corporation on Oct. 25 noted overbuilding was still a concern in Saskatoon.
CMHC said the amount of completed and unsold units remains slightly above the threshold, and the rental apartment vacancy rate of 9.6 per cent in October 2017 was above the critical threshold of 7.47 per cent.
SRHBA said there are signs of improvement.
The number of new unsold homes decreased from 905 units in February 2017 to 484 units in September 2018, a decline of 46.5 per cent
The association also reported an 11.6 per cent increase in the number of residential building permits issued in September compared to the same month a year ago. SRHBA said the 433 permits issued were driven by a 44 per cent increase in multi-family units.
The value of those permits, however, dropped by 24 per cent to $33.9 million, with single and multi-family permits plunging 24 per cent and 37 per cent respectively.
SRHBA said new home construction, renovations, and repairs accounted for just over 11,000 jobs in Saskatoon during 2017, making the industry vital to the region’s economy.