How economic uncertainties are affecting home sales in Saskatchewan

by Gerv Tacadena22 Jul 2019

Saskatchewan's housing market was a mixed bag in the first six months of the year – and economic uncertainties affected each city differently, with some reporting growth in home sales while others witnessing declines.

Saskatoon and Regina, for instance, saw home sales increase during the first half of the year compared to the same period in 2018. It was the opposite in cities like North Battleford and Prince Albert, where sales fell. Meanwhile, home sales were flat in Moose Jaw and Estavan.

As a result, home sellers in Saskatchewan are uncertain of the future of the housing market. In fact, a recent survey by Century 21 revealed that 85% of agents' selling clients were concerned about the external forces that could affect how much properties get sold and how long they would stay in the market.

Some of the concerns raised by the respondents in the study were the federal government's mortgage stress test, interest rates, and new taxes.

Read more: New rules will impact Saskatchewan ‘needlessly’ - broker

Gord Archibald, chief executive officer of the Association of Regina Realtors, said he understands where the negative sentiments come from.

"If you're a seller, you've lost value in your home over the last number of years,” Archibald told The Star Phoenix. “You'll probably attract offers much less than they would have been. It will take longer to sell and may even sell at a smaller percentage of the selling price. I would imagine those are the reasons for seller concerns."

Archibald said the slower sales recorded in cities across Saskatchewan over the last two years could be attributed to housing policy and the stagnant economy. He said the sluggish growth in jobs is a significant factor that affected the demand for homes.

Archibald also argued that applying the stress test in a weak market such as Saskatchewan would only make matters worse.

"Those types of measures are largely directed at frothy markets in Toronto and Vancouver, but they didn't need to be applied with a broad brush across all markets in Canada,” he said. “Our issue isn't with the idea of the stress test – it's just how it was applied.”

However, it appears the gloom in the province is about to end — a recent forecast by the Canadian Real Estate Association (CREA) pointed to a slight improvement in home sales this year. According to CREA's estimates, home sales in the province could hit 10,720 this year and 10,920 in 2020.

Prices, however, are not slated to rise. CREA predicts a further slump in average prices, down by 3.3% to $277,200 this year and 1.7% to $272,500 in 2020.

A separate report by RBC said demand-supply conditions have returned to balance and prices are beginning to stabilize. The proportion of household budget needed to cover housing costs in the province is at 33.2%, which is considered to be in the affordable range.

 

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