Surplus of inventory and low commodity prices contribute to home price depreciation across the region
SASKATOON, January 10, 2018 – According to the Royal LePage House Price Survey1 released today, home prices in Saskatoon saw moderate declines in the final quarter of 2017, with the aggregate price of a home in the region dipping 2.2 per cent year-over-year to $377,222.
When broken out by housing category, the median price of a two-storey home decreased 0.4 per cent year-over-year to $410,819 in the fourth quarter of 2017, while the median price of a bungalow decreased 4.6 per cent to $338,854.
“The decrease in home prices that we saw in Saskatoon in the final quarter of the year comes down to a high level of available inventory, especially in the bungalow segment of the market,” said Norm Fisher, broker and owner, Royal LePage Vidorra.
“In recent months, we have seen a surplus of activity at price points below $350,000 that has boosted the market, but not enough to keep prices from sliding.
“We continue to struggle with low commodity prices. When they are down, our housing market is impacted significantly,” continued Fisher. “We have seen layoffs in the potash and uranium industries, keeping our unemployment rate above the national average. However, we do see improvements on the horizon. Saskatoon has great inventory at an affordable price point for first-time buyers to choose from, providing them with attractive options and time to make an informed decision.”
Nationally, Canada’s residential real estate market saw strong, but slowing year-over-year price growth in the fourth quarter of 2017. The Royal LePage National House Price Composite, compiled from proprietary property data in 53 of the nation’s largest real estate markets, showed that the price of a home in Canada increased 10.8 per cent year-over-year to $626,042 over the three-month period. When broken out by housing type, the median price of a two-storey home rose 11.1 per cent year-over-year to $741,924, and the median price of a bungalow climbed 7.1 per cent to $522,963. During the same period, the median price of a condominium appreciated faster than any other housing type studied, rising 14.3 per cent to $420,823 on a year-over-year basis.
“To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability,” said Phil Soper, president and CEO, Royal LePage.
“This is especially true for first-time buyers whose purchasing power has been reduced by tightening mortgage regulations.”
In line with Royal LePage’s previous Market Survey Forecast, Royal LePage predicts that the price of a home in Canada will increase 4.9 per cent by the end of 2018. Looking ahead, the company anticipates that the new OSFI stress test will slow the housing market in the first half of 2018, as buyers adjust their expectations and many market participants take a “wait and see” approach.
“The unsustainably high rates of home price appreciation witnessed in recent years in B.C. and Ontario were dangerous to the stability of not only the housing market but to the broader economy itself,” continued Soper. “Policy measures like the OSFI stress test will quell runaway housing inflation to an extent. However, we do foresee an upswing in demand in the latter portion of the year, as prospective buyers adjust to the new realities. To put it another way, the demand is still there.”