Q1 2019 New Housing Market Analysis for Saskatoon & Region
For Immediate Release
As we move into 2019, we continue to see the year-over-year decreases that we were seeing in 2018. These remain to be due in large part to government policies like the national mortgage stress test and the 2017 introduction of PST on construction labour.
SRHBA Board of Directors Chair Cam Skoropat elaborates, “The good news is that inventory levels have come down and the economy looks promising for the near future. Unfortunately, there are still factors, like the national mortgage stress test and introducing PST on construction, which continue to hurt home ownership and the residential construction industry. We know now that the stress test is affecting us at levels that are disproportionately devastating in our region compared to the markets it was originally designed to address. On top of that, PST on construction has made it even harder for the new home market to compete with the prices that are now being driven down in the resale market.”
Multiple data sources demonstrate these effects, and give insight into why they are disproportionately affecting Saskatoon. A recent report by RBC showed the stress test as being the biggest contributor to new home sales declines in Saskatchewan, and CIBC research in 2018 showed that the decrease in mortgage values was due not to smaller mortgages, but to a decline in the number of borrowers.
To see why this is affecting Saskatoon more than other cities, it helps to look at the demographic data. The largest group being shut out of the home buying market are first time home buyers under 35 – millennials. This is the same group that Equifax data has shown to be the lowest risk class of borrowers, already having the lowest mortgage delinquency rate of any age group. Saskatoon happens to have, on a relative basis, the largest share of millennials – 34% of the population is aged 20-34 – among any major city in Canada. What this means for Saskatoon is that we have the highest rate of otherwise qualified buyers being denied mortgages because of overzealous policy that was designed with riskier borrowers in different markets in mind.
These detrimental effects extend far past the borrowers and residential construction companies who are immediately impacted. “What you’re starting to see now is the effect of hindering an industry that provides so many jobs and has such a huge overall impact on our region’s economy,” explains SRHBA CEO Chris Guérette. “When the residential construction industry is allowed to thrive, the economic health, growth, and overall standard of living in our region all benefit. On the flip side, when it’s being stifled like it is right now and those jobs can no longer be supported, it can become more of a dead weight and you’ll feel those effects radiate throughout the economy.”
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.