There’s strong evidence of problematic conditions in Regina, Saskatoon and other housing markets across the country, according to Canada Mortgage and Housing Corp.
“Home prices have risen ahead of economic fundamentals such as personal disposable income and population growth,” CMHC said in its housing market assessment released Wednesday. “The result is overvaluation in many Canadian housing markets.”
The agency says there’s strong evidence of overbuilding in Regina and Saskatoon.
The number of completed and unsold units per 10,000 population declined in Regina during the second quarter of 2016, following continued reductions in housing starts.
However, inventory of new housing units relative to population was still above the housing market assessment’s long-term overbuilding threshold.
“The on-going oil price shock and weak potash prices have had a moderating effect on economic activity and housing demand in Regina, characterized by slower employment growth and lower net migration,” CMHC said.
“As a result, market absorptions have not kept pace with new housing completions, particularly among condominium apartments, where inventory levels remained elevated at the end of June 2016.”
In Saskatoon, the number of completed and unsold units per 10,000 population rose sharply in the same period to nearly double the value of the long-term overbuilding threshold.
“This is symptomatic of a market where weak economic conditions have greatly reduced the absorption of new housing units upon completion and from existing inventory,” CMHC said.
“This is particularly the case with condominium apartments and row houses where inventory levels were significantly higher in June 2016 than in June 2015.”
The report also found moderate evidence of overvaluation in Regina and Saskatoon, as well as weak evidence of overheating and accelerated price growth in both markets.
Nationally, housing starts and Multiple Listing Service (MLS) sales are expected to decline slightly in 2017 before stabilizing in 2018.
