Saskatchewan to lead country in economic growth in 2010
November 5, 2009
Saskatoon and Regina will lead the way in economic growth among 13 major cities in Canada, according to Conference Board of Canada's Metropolitan Spring Outlook.
"Saskatoon and Regina will not match their spectacular 2008 growth rates, but they have enough economic momentum to top all other census metropolitan areas again this year," says Alan Arcand, principal economist for the report.
After growing by seven per cent last year, Saskatoon's economy will increase by 1.7 per cent in 2009 and continue to lead the nation in real GDP growth. Regina's economy grew by 5.3 per cent in 2008, and is projected to grow another 1.6 per cent in 2009.
The board attributed Regina's continued economic growth to large capital projects, including the $1.9 billion expansion of Consumer's Co-Operative Refineries Ltd., as well as the development of the global transportation western hub of the city and the $180 million redevelopment of Evraz Place.
Strong in-migration in Saskatchewan is expected to support housing construction activity and demand going forward in 2009 and into 2010. By the end of 2008, a record 11,648 people moved to the province, as employment grew 2.8 per cent year-over-year.
All of this will impact the housing market as a whole. There will be more new stock on the market, which will cause prices to drop slightly. However, as people move to the city, sales will increase. The Canadian Real Estate Association is predicting that prices will fall 1.6 per cent to $220,900 in Saskatchewan by year-end 2009, and another 1.1 per cent to $218,400 in 2010.
The spring market has been more active than last years and in April 2009 home sales increased 11.2 per cent, the third consecutive month-over-month increase. Meanwhile, listings fell 1.8 per cent.
"Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January," says Dale Ripplinger, president of CREA and local Regina broker. "Strengthening consumer confidence, low interest rates, and improved affordability are drawing buyers to the housing market across Canada," he adds.
The momentum in the spring market took CREA by surprise, says Gregory Klump, chief economist at CREA. "It's setting the stage for an improvement next year and indeed in the second half of this year," he adds.
In Saskatoon, the housing market is still experiencing a period of adjustment. In April, the average price was down 10 per cent from the same month of 2008, at $275,455. However, listings, while still higher than usual at 694, were down nearly 23 per cent year-over-year. The number of sales came in at 353, down 15.5 per cent.
However, with vacancy still low at 1.9 per cent, rents still rising to $868 in April 2009, from $759 in April 2008, and the city leading the nation in terms of growth, there are opportunities for investors.
Monte Dobson, local investor and president of C2 Ventures Inc., suggests investing in a student rental close to the University of Saskatchewan, or near a bus route on the way to the university. "This includes most areas on the east side of the river including Sutherland, 8th Street, and over to McKercher Drive."
The cost for a two-bedroom apartment-style condo, which is preferred among the student renter demographic, is about $165,000 and can generate a monthly rent of about $1,000.
Buyers should also be aware that the Mortgage Brokers Act in Saskatchewan is being retooled by the Financial Services Commission. For consumers applying for a loan, the main benefit of the new act will be increased protection because there is going to be more regulatory action over individuals in the mortgage industry.
"Really what we're doing is confirming that the mortgage broker has that duty of care to the consumer where the consumer is seeking a loan from a financial institution, and that the broker has to ensure that the mortgage is suitable for the consumer's needs. We feel there are a number of items that will collectively improve consumer protection," says Cory Peters, audit licensing and compliance manager at the Financial Services Commission, Regina.
While nothing is finalized yet, Peters says the new legislation will likely include more compliance rules for brokerages, such as errors and omissions insurance, and more explicit rules around consumer disclosure, licensing and education. The act will lay out more detailed education and licensing requirements and will also implement a model similar to Ontario's, where unlicensed mortgage agents are clearly differentiated from licensed mortgage brokers.
This differs from the process already in place in that the current legislation does not specify education programs for broker license applicants, but evaluates them on a case-by-case basis, looking at factors like past work experience. Most applicants are required to work under a more experienced broker (who they seek out) until that broker decides they are fit to be licensed.
From the September 2009 issue of Canadian Real Estate