Lower construction starts and sales are just a few factors stemming from high interest rates, according to the latest housing outlook report by the Canada Mortgage & Housing Corporation (CMHC).
The report is forecasting modest price growth throughout Canada, as well as a tightening of the rental market.
Regina is following a lot of the trends seen around the country, as lower construction starts and sales is primarily due to increased borrowing costs for mortgages creating barriers of entry.
“Higher costs imposed onto builders will also slow construction starts,” said Anita Linares, a senior specialist for CMHC. “In Regina in particular, we saw a compositional shift into townhomes, as again there was a barrier to enter into single-detached homes.”
Linares added vacancy rates are expected to fall below 3 per cent, and said renters could see an increase in average rent prices when rates decrease below that threshold.
Saskatoon’s story is also similar to Regina. Nelson said inventory is “very low” compared to the 10-year average, but the low inventory may have some upside risk to the price.
“This is a trend that we’ve been seeing since 2021,” said Nelson. “It shows no signs of really abating right now, and that combined with the slow pace of growth, or the slow pace of construction really could put some upward pressure on prices.”
He adds Saskatchewan has a lot of economic potential, which attracts people from less affordable areas of the country, but will also put added pressure on house prices and rents.
As for the next few years? Linares said the market may begin to grow once again.
“For 2024-2025 in particular is when we expect to see an increase in modest growth again, increase of construction starts, sales and average prices again, due to this pent-up demand that we are seeing and a return to a balanced market.”