Mortgage stress test, PST continue to affect Saskatoon’s new home market
The mortgage stress test and PST on construction continue to have an effect on new housing construction and sales in Saskatoon, according to a local organization.
The Saskatoon & Region Home Builders’ Association (SRHBA) said Friday there continues to be a year-over-year decline in new home starts due in large part to government policies.
“Unfortunately, there are still factors, like the national mortgage stress test and introducing PST on construction, which continue to hurt home ownership and the residential construction industry,” said SRHBA chair Cam Skoropat.
“We know now that the stress test is affecting us at levels that are disproportionately devastating in our region compared to the markets it was originally designed to address.”
Skoropat said PST on construction labour brought in by the Saskatchewan government in 2017 is also having a negative impact on new home sales.
“PST on construction has made it even harder for the new home market to compete with the prices that are now being driven down in the resale market,” Skoropat said.
Jason Yochim, CEO of the Saskatoon Region Association of Realtors (SRAR), has previously linked the mortgage stress test adversely affecting Saskatoon’s housing market.
Yochim said buyers who would have previously qualified for a low-end single family home are instead more likely to buy a townhouse or apartment condominium, or stay out of the market completely.
The SRHBA agrees with that assessment, stating the largest group being shut out of the market are millennials.
“What this means for Saskatoon is that we have the highest rate of otherwise qualified buyers being denied mortgages because of overzealous policy that was designed with riskier borrowers in different markets in mind,” said a statement from the SRHBA.
WATCH BELOW: Mortgage stress test stressing Sask. homebuilders
SRHBA said 202 new homes were sold in the first three months of the year, a 36 per cent decrease from the same period in 2018.
New home inventories in March declined 38 per cent compared to the historical highs of March 2015, SRHBA reported.
SRHBA also said new building permits were down 23.8 per cent during the first quarter of 2019 to $59.5 million, with starts in both single-family homes (20.1 per cent) and multi-unit family homes (39.1 per cent) declining.
The value of renovation permits also fell in the quarter by 0.5 per cent compared to the same period last year.
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