| Saskatchewan Poised to Experience Strong Economic Growth | |
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| Saskatchewan's housing affordability deteriorates sharply | |
| Migration hits 25 year high After several years of stability, Saskatchewan's housing affordability eroded sharply in the first quarter of 2007, according to the latest housing report by RBC Economics. "Two-storey homes were hit the hardest, as the province's housing market jumped into a severe state of excess demand," said Derek Holt, assistant chief economist, RBC. "An influx of migrants, the sharpest quarterly gain in twenty-five years, complemented a pick-up in wage growth and caught home builders off-guard, resulting in soaring prices and a rapid decline in affordability. Caution is warranted because the staying power of this shift in migration is uncertain at this early stage and comes after ten consecutive years of net migration outflows." The RBC Affordability report for Saskatchewan, which measures the proportion of pre-tax household income needed to service the costs of owning a home, eroded significantly to 36 per cent for a two-storey home, 33 per cent for a detached bungalow, 26 per cent for a standard townhouse and 21 per cent for a condo. The sudden drop in affordability reflected a peak in the sales-to-listing ratio at 0.92 per cent in April - the highest in the country and the highest on record for Saskatchewan. Resale prices also saw first quarter annual gains at close to 30 per cent. Labour, land and material shortages helped drive construction costs up and as a result saw new home prices in Saskatoon skyrocket 25 per cent compared to a year ago. This drove a record pace of affordability deterioration in Saskatoon. The report noted that while conditions are expected to remain elevated, rising costs will help stabilize demand, creating a more sustainable housing market toward the end of 2007. Visit www.rbc.com/economics/market/pdf/house.pdf for the full report. |
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