Fewer housing options, higher rents for Saskatoon: CMHC says

Housing prices are expected to grow slowly for Saskatoon in 2023, a new housing report says.

The Canadian Mortgage and Housing Corporation (CMHC) released its 2023 Housing Market Outlook on Thursday, which looks at housing trends around the country.

“We expect to see price growth of less than one per cent in the Saskatoon CMA in 2023,” the report said.

CMHC said buyers have been looking for lower-priced options as mortgage rates rise, but the market should return to historical norms later in 2023.

The report acknowledges a supply challenge in the city, which CMHC says has been a trend since 2021.

“This introduces possible upside risk to our price forecasts depending on the future trajectory of new listings and, subsequently, existing home inventories,” the report says.

“Our current expectation is that upward pressure on prices will gain momentum in the second half of 2023.”

CMHC said they expected stronger sales, declining listing and sales to return to historical norms, leading to stronger price growth next year.

“We expect that an improving economy and the relative affordability of housing in the Saskatoon [area] will continue to attract many more people to the area.”

The report noted that the city was seeing large international migration and strong population growth in general, which will lead to support for all types of housing. Saskatoon is experiencing record international migration into the region. This, along with stronger population growth in general, is expected to support demand for all housing types and tenures through 2025.

HOUSING STARTS

The CMHC report also said that housing starts will decline this year and improve in 2024 after new home inventories for single-detached properties increased to 170 in February 2023 from 88 units in May 2022.

“This increase will likely contribute to a weaker first half of 2023 for single-detached starts as builders direct demand toward unsold units before building new ones. Thus, the impact on overall housing starts at year-end will be to the downside,” according to the report.

When it comes to multi-unit buildings, the CMHC says economic conditions and population growth will lead to strong starts.

“Higher mortgage rates will contribute to demand for rental options and for relatively more affordable ownership options. More affordable ownership options include semi-detached, townhome and apartment condominium units.”

CMHC said that townhomes and apartment condo units were already low when compared to 2012 and 2005. The report says that new rental apartment starts should remain robust through 2025, driving the vacancy rate lower.

“We anticipate the vacancy rate will decline gradually over the next few years and reach 1.8 per cent in 2025.”

• Get the CTV News app for Saskatoon area breaking news alerts and top stories 

The result will be an increase in rent levels, CMHC said.

“As a result, from 2023 to 2025, growth in the average rent for a 2-bedroom apartment will be higher than the 10-year average.”