Strong economic fundamentals will add to housing demand
In 2024, we foresee a robust economic landscape shaped by several key factors. A significant influx of international migration, coupled with substantial population growth, particularly within the 25-to-44 age group, is expected to put upward pressure on the economy. Also, the growth in high-income industries is projected to stimulate employment and average wage increases. Together, these positive economic indicators are anticipated to drive an increase in housing demand.
As prices and demand are expected to continue to climb, concerns over affordability in both the housing and rental markets are becoming more prevalent.
Overall, we predict Saskatoon to have a stable housing market growth, supported by the following:
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Employment growth boosted by increased capital investments in the province.
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A surge in housing demand from younger families looking for their first or step-up home.1
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Government policies such as loosening zoning laws and the Housing Accelerator Fund.2
Risks of greater price increases could occur with a decrease in interest rates and inflation, which could further stimulate housing demand.
Total starts are expected to have moderate growth, driven largely by growth in multi-unit development
Despite low inventories and high demand pressures, single-detached housing starts are not expected to grow throughout the forecast period. New single-detached housing construction was not absorbed as quickly as developers had anticipated, leading to a modest build- up in inventory. Also, with prices of new construction continuing to rise, families looking to move into new housing projects are seeking more affordable housing options.
Still, multi-unit development in 2024 is expected to see robust growth fuelled mainly by rental apartments and lower-priced multi-unit dwellings. Historical data shows
a significant increase in starts for multi-unit development, a trend that will likely persist. However, if market conditions improve, preferences may switch back to single-detached homes, slowing the demand for multi-unit developments.
Low inventories will limit sales growth and push prices up in the short term
Moderate growth in sales is anticipated in 2024, as a result of low inventory in the market. Affordable segments including condominium apartments and ground-oriented multi-unit dwellings will lead sales figures as high interest rates are limiting borrowing capacity in the short term. The demand for these units will be sustained by first-time homebuyers, and families looking to downsize. Additionally, since multi-unit developments are often located in desirable neighbourhoods with nearby amenities, demand for them will continue to rise at a steady pace persisting into 2026.
The MLS® average price is expected to see a modest increase in 2024. The affordable segments will continue to stay tight, driven by strong international migration. This heightened demand will raise prices at lower price points and thus further stimulate sales at higher price points from move-up buyers. Despite these trends, the average home price will remain relatively affordable, especially when measured on a price-to-income basis, compared to other Prairie markets.
The rental market is expected to remain tight — lower vacancy rates continue to drive rent growth
We forecast vacancy rates to drop further in Saskatoon
in 2024. Rapid population growth is increasing housing demand and costs, and restricting families’ mobility in the rental and ownership market, leading to longer stays in rental units. Like in 2023, while robust growth in multi-unit development is expected within the forecast period, demand is likely to outpace supply, keeping the rental market tight. Given the anticipated demand, vacancy rates are forecast to remain low until 2026. However, should the anticipated strong multi-unit development meet the demand, vacancy rates may increase toward 2026.
As the vacancy rate drops, the average rent for a 2-bedroom apartment is expected to rise. Historically, when vacancy rates dip below 2%, average rent growth tends to accelerate. In 2024, we project rent growth to be in line with the previous year’s growth of 9%.
HIGHLIGHTS
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Saskatoon’s affordability relative to other Prairie markets is expected to raise housing demand, driving price growth.
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Low inventories will intensify competition for housing, driving up prices and resulting in modest sales growth in the short term.
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Total starts will grow modestly, primarily driven by multi-unit housing starts throughout our forecast horizon.
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Rental markets are expected to remain tight until 2026 as supply is not anticipated to meet the rising demand.
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