Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

October 30, 2014 08:15 ET

After Rising in 2014, Housing Starts to Moderate Over Next Two Years

SASKATOON, SASKATCHEWAN--(Marketwired - Oct. 30, 2014) - According to Canada Mortgage and Housing Corporation's (CMHC) Fall 2014 Saskatoon Housing Market Outlook released today, total housing starts in the Saskatoon Census Metropolitan Area (CMA) are on pace to reach 3,300 units in 2014, up 11 per cent from 2,980 in 2013. A total of 3,125 and 3,050 housing starts are forecast for 2015 and 2016, respectively, which despite the reduction will remain among the highest in over 30 years.

"Declining new home inventory so far in 2014 has prompted a faster pace of starts this year. However, with the volume of units under construction recently rising to a 34-year high, there is a risk of higher inventory in the months ahead. With slower employment growth and lower net migration also expected through 2016, this will have a moderating effect on housing starts in Saskatoon over the next two years," said Goodson Mwale, CMHC's Senior Market Analyst for Saskatchewan.

Single-detached starts in Saskatoon are projected to moderate to 1,600 units in 2014 from 1,658 a year earlier. "A shift in housing demand towards lower-price options offered by the multi-family sector, as well as competition from a well-supplied resale market, has reduced single-detached construction this year," noted Mwale. Moving forward, single-detached starts will decline further to 1,550 units in 2015 and 1,500 in 2016, as employment growth and net migration slow and builders face higher inventory levels.

Multi-family starts, which consist of semi-detached units, rows, and apartments, are on pace to reach 1,700 units in 2014, up 29 per cent from 1,322 in 2013. "This will mark the first time in 10 years that multi-family starts will have surpassed single-detached starts," added Mwale. Declining multi-family inventory and increased demand for lower-priced options such as condominium townhouses and apartments have resulted in more multi-family projects being initiated this year. Moving forward, with units under construction at a 30-year high in the summer of 2014, inventory is expected to rise in the coming months, thus moderating multi-family starts to 1,575 units in 2015 and 1,550 in 2016.

Resale activity in the Saskatoon CMA is projected to rise 4.6 per cent to 5,800 MLS® sales in 2014, supported by continued employment growth and elevated net migration. In 2015, sales are expected to rise modestly to 5,825 units, before edging higher to 5,875 in 2016. Slightly higher mortgage rates towards the latter part of 2015, combined with moderating employment growth and lower net migration, will limit the gains in resale transactions over the next two years.

With market conditions remaining largely balanced in 2014, the average MLS® price is projected to rise 2.8 per cent to $341,300, a modest gain compared to the past two years. Similar gains are expected over the next two years, with the average MLS® price forecast to reach $348,000 in 2015 and $352,000 in 2016.

As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

For more information, visit www.cmhc.ca or call 1-800-668-2642. CMHC Market Analysis standard reports are also available free for download at www.cmhc.ca/housingmarketinformation.

Follow CMHC on Twitter @CMHC_ca

Additional data is available upon request

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Contact Information

  • Market Analysis Contact:
    Goodson Mwale, Senior Market Analyst
    (306) 975-4897
    gmwale@cmhc.ca

    Media Contact:
    Charles Daniel Mainville
    Senior Communications Consultant
    (403) 515-2915
    cdmainvi@cmhc.ca