The Saskatoon housing market is showing signs of stability, but still shows signs of overbuilding, according to two recent reports.
Sales demand increased nine per cent in the second quarter of 2019 compared to the same period last year, with apartment sales leading that growth, said the report from the Saskatoon & Region Home Builders’ Association (SRHBA).
Apartment sales were up 65 per cent in the first half of the year, SRHBA said in its new housing market analysis, but added the effects of the mortgage stress rules are still being felt.
“The new housing market continues to experience pressure from government policies and with the average price of a home continuing to decline in Saskatoon, it adds yet another layer of pressure in the development and residential construction sector,” SRHBA CEO Chris Guérette said.
New building permits issued in the first six months of the year declined 2.1 per cent from the same period last year, due to a 10 per cent decline in single-family home permits and a 12 per cent decline in renovations permits, SRHBA reported, with multi-family permits increasing 67 per cent.
“While the number of companies pulling permits has declined again this year, with less than half of certified professional home builders pulling permits for single-family homes, the good news is the industry has proven incredibly resilient against some particularly challenging times,” Guérette said.
“This is an excellent time to invest in a new home.”
In a separate report, CMHC said there are still signs of moderate overbuilding in the Saskatoon market.
“Despite a pullback in homebuilding activity, the Saskatoon housing market remains moderately vulnerable due to overbuilding signalled by an elevated vacancy rate,” CHMC’s Goodson Mwale said.
“However, the ratings on other factors such as overheating, accelerating prices and overvaluation remain low.”
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CMHC said the city’s high annual rental vacancy rate of 8.3 per cent in 2018, above the critical threshold of 7.69 per cent, was a factor in maintaining the moderate overbuilding rating.
New home construction in Saskatoon has slowed over the last two years, CMHC said, with homebuilders clearing unsold inventory before starting new projects.