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Modest recovery expected in Saskatoon’s new housing market: CMHC

July housing starts in the Saskatoon Census Metropolitan Area were almost less than half as many compared to 2013, according to CMHC.
CMHC said higher construction costs, rising interest rates and regulatory impacts affected Saskatoon’s new housing market in 2019. File / Global News

A recovery in housing starts is expected in Saskatoon over the next two years but will remain below the 2014 peak, according to a new report from the Canada Mortgage Housing Corp. (CMHC).

In its fall 2019 housing market outlook, CMHC said there will also be gains in housing sales, but price growth will remain subdued.

READ MORE: Sask. building permit values surge, but market still ‘under-performing’

“Demand for new and resale homes will be supported by continued growth in fundamentals such as employment, income, and population,” CMHC senior analyst Goodson Mwale said on Thursday.

“Meanwhile, both sales and prices for existing homes are expected to increase modestly over the forecast period.”

CMHC said higher construction costs, rising interest rates and regulatory impacts affected the new housing market in 2019.

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Total housing starts for the year are now forecast to range between 850 at the low end, and 1,450 at the high end, with an even balance in starts between single-detached homes and multi-family homes.

CMHC said gains are expected in 2020 and 2021, with multi-family construction increasing due to “affordability challenges in the homeownership market,” and the market will shift to lower-priced options such as condominium apartments and townhouses.

READ MORE: Signs of stability in Saskatoon’s housing market

There is a downside, the report said.

A downturn in world-wide demand for commodities could affect employment in the region, resulting in higher unemployment and a net loss of migrants to the city, which could result in fewer starts.

On the resale side of the housing market, CMHC said sales in the first eight months of the year have outpaced the same period in 2018 due, in part, to a demand for more affordable housing in the condominium apartment market.

Those gains are expected to carry forward over the next two years in all segments of the housing market, but will be modest, the report stated.

READ MORE: Vulnerability still exists in Saskatoon’s housing market

Prices are also forecast to stabilize in 2020, and a modest increase is possible in 2021, CMHC said.

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Apartment vacancy rates continue to fall after reaching an all-time high of 10.3 per cent in 2016.

CMHC said the vacancy rate in 2019 is forecast at 7.3 per cent, and expected to drop to 6.8 per cent in 2020.

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