Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

October 26, 2015 08:15 ET

Saskatoon Housing Starts to Decline in 2015, But Stabilize Through 2017

SASKATOON, SASKATCHEWAN--(Marketwired - Oct. 26, 2015) - According to Canada Mortgage and Housing Corporation's (CMHC) Fall 2015 Saskatoon Housing Market Outlook released today, total housing starts in the Saskatoon Census Metropolitan Area (CMA) are forecast to decline to 2,400 units in 2015, but stabilize near that level at 2,390 units in 2016 and 2,420 units in 2017.

"The combination of weaker economic conditions, elevated new home inventory and competition from a well-supplied resale market has prompted new home builders to scale back production this year. In 2016, housing starts are forecast to remain near the level expected in 2015, while a gradual improvement in economic conditions will support a slightly higher level of housing starts by 2017," said Goodson Mwale, CMHC's Senior Market Analyst for Saskatchewan.

Single-detached starts in Saskatoon are on pace to reach their lowest level since 2009 this year at 1,100 units, a 30 per cent reduction from 2014. Softer economic conditions and elevated inventory have slowed single-detached starts in 2015. Next year, employment growth will not be enough to attract more migrants to Saskatoon, which will moderate housing demand. As such, new construction of single-detached units is expected to slow to 1,080 units in 2016. However, improving economic conditions and a depletion of inventory during the latter part of 2016 will support a modest rise to 1,090 units in 2017.

Multi-family starts, which include semi-detached, row, and apartment units, are forecast to decline 34 per cent to 1,300 units in 2015, followed by modest increases to 1,310 units and 1,330 units in 2016 and 2017, respectively. While the past few years have seen an increase in the demand for lower-priced options in the multi-family sector such as condominium apartments, weaker economic conditions and elevated inventory have prompted a slower pace of new construction of multi-family units this year. Next year, multi-family starts are expected to edge up with higher employment growth, while being constrained by inventory reduction.

After reaching nearly 6,000 sales in 2014, MLS® sales in Saskatoon are forecast to decline to 5,200 units in 2015. The impact of lower oil prices on employment and income growth has moderated demand for existing homes this year, while weaker labour market conditions have lowered net migration to the region, also reducing housing demand. In 2016, MLS® sales are forecast to remain relatively stable at 5,260 units, supported by a slight improvement in economic conditions towards the latter part of that year. As employment growth is forecast to gain more traction the following year, a slightly higher level of sales is projected for 2017 at 5,350 units.

Buyer's market conditions will result in a 0.7 per cent decline in Saskatoon's average MLS® price to $338,700 in 2015 from $341,061 in 2014. As market balance improves, modest increases in the average resale price to $343,800 and to $349,200 are projected for 2016 and 2017, respectively.

As Canada's authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

For more information, visit http://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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