Media Release – Q4 New Housing Market Analysis
FOR IMMEDIATE RELEASE
Q4 New Housing Market Analysis
What is causing the Saskatoon housing market to underperform, and what can be done to fix it?
Saskatoon, SK (February 26, 2019) – The Saskatoon & Region Home Builders’ Association (SRHBA) has released its Q4 New Housing Market Analysis, which breaks down current market conditions and the key factors affecting them for the entirety of 2018. It’s no secret that this was a tough year for Saskatoon’s housing market, and this report provides specifics as to just how tough it was, which sections of the industry have been most affected, what the contributing factors were to the underperformance of the market, and what is around the corner for Saskatoon & Region.
While a few of the factors contributing to the lull in permit activity cannot be immediately helped, there are several that can. Multiple recently implemented policies continue to harm our region’s affordability and potential for growth, and are causing many citizens in the region to postpone their dream of homeownership. These are factors that different levels of government have the power to remedy.
It will be important for these to be addressed quickly, as the residential construction industry and the huge number of jobs that rely on it are vital to the overall economic growth of the region. SRHBA CEO Chris Guérette explains, “What we’ve been hearing from our members throughout the year echoes what you will find in these analyses. There have simply been too many policies introduced recently that have had a compounding effect on the cost to build homes, and the ability of potential homeowners to buy them. We have an industry that’s proven to be resilient in extraordinarily tough conditions, but it’s being pushed to the breaking point.”
Key takeaways from the report include:
- New housing construction is at an 11 year low with declines in both the single and multi-family units.
- New home sales in the Saskatoon metro area dropped to levels not seen since 2006. New home sales have declined every year for the past 6 years.
- Saskatchewan ranked last among all provinces in terms of percentage growth in 2018 at -28%.
- The introduction of PST on new home construction by the Government of Saskatchewan is increasing the cost of new homes.
- Recent changes to the mortgage stress test are the biggest contributor to home sales declines in Saskatchewan.
- Demand for newer generation apartments in core areas has been particularly strong. However, they cater to a specific demographic.
- The number of building permits declined 33.8% in the fourth quarter of 2018 compared to the same period in 2017.
- Saskatoon’s economy is expected to be the 3rd fastest growing major metro area in Canada in 2019. However, the economic expansion will be below the 20-year average growth for the city.
- Households are re-evaluating housing prospects. Some will have to lower their expectations about what they can afford; others will put their house hunting on hold and continue to rent until they have saved more.
- New housing construction is expected to remain below the 10-year average. However, supply is expected to rise from 2018 lows providing some needed relief to builders and developers.
- Saskatoon’s economy lost steam throughout 2018 following the economic rebound in 2017. Although the commodity bust seems behind us, the return to a boom cycle is unlikely.
- Energy and mining investment in Saskatchewan is expected to have declined 51% between 2014 and 2018.
- Emerging sectors such as high-technology and value-added agriculture continue to transform Saskatoon’s economy.
- From a technical standpoint, the economy has recovered from the oil recession. However, the overall standard of living in Saskatoon is not expected to recover to 2014 levels any time soon.
Click here for a PDF of the full report.
Krystal Rudyk, Marketing & Communications Manager
Saskatoon & Region Home Builders’ Association
The Saskatoon and Region Home Builders’ Association (SRHBA) is the expert voice of the residential construction industry in Saskatoon and area. The SRHBA works closely with municipal and provincial governments and with its members to improve affordability, quality and choice in the industry it represents.