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Saskatchewan 'the new Alberta,' analyst says

By Cassandra Kyle for TheStarPhoenix.com

Friday, March 14, 2008

Saskatchewan may not have the Rocky Mountains, the C-Train or the world's largest mall, but this province is "the new Alberta," according to an RBC report released today.

Growth in the housing sector and a related drop in home affordability form the basis of the claim, according to RBC's assistant chief economist Derek Holt. Saskatchewan is expected to be the only province in 2008 to see an increase in housing starts over 2007, the report states.

"Saskatchewan is the new Alberta - holding the top spot nationwide on growth across all key housing indicators including housing starts, house prices, residential building permits and resale activity," Holt explained in a company news release.

"We still expect the province's housing market to stabilize sometime in 2008 as price gains come off their peaks and mortgage rates dip further."

According to RBC's housing affordability measure for Saskatchewan, which shows the percentage of pre-tax household income needed to pay for the costs of owning a home, provincial owners of a detached bungalow spend 40 per cent of their income on their house. The figure is two per cent shy of what Calgarians pay - 42 per cent - for their detached bungalows.

The housing affordability measure in Saskatchewan deteriorated in all of the RBC's four classes of homes. In addition to the bungalow, the standard townhouse moved to 34 per cent, the standard condo came in at 26 per cent and the standard two-storey home reached 42 per cent.

Vancouver remains at the top of the affordability measure with a detached bungalow costing homeowners 74 per cent of their pre-tax income.

A lack of inventory in the existing home market is driving demand for new homes, the report states, with housing starts in the province up 62 per cent last year. Prices of these new homes continue to rise, according to RBC, with year-over-year growth running at 45 per cent in Saskatoon and 26 per cent in Regina.