With more than 400 unsold new housing units on the market, Regina's housing construction activity is expected to slow by 25 per cent in 2014, followed by an 8.5 per cent reduction in 2015 and a 2.3 per cent decline in 2016, according to the Canada Mortgage and Housing Corp.
Total housing starts in the Regina area are on pace to reach 2,350 units in 2014, with 2,150 and 2,100 starts projected for 2015 and 2016 respectively, CMHC said Thursday.
"We're seeing a moderation in housing starts in Regina," said CMHC's senior market analyst for Saskatchewan, noting that both 2013 and 2012 were "very strong years" for housing construction in the Regina area.
But builders got ahead of themselves, resulting in a backlog of 146 unsold single-family homes and 273 condo units by the end of September, forcing them to slow down the pace of construction in 2014.
As a result, new home prices are also expected to moderate. Multi-family dwellings, which consist of semi-detached units, row houses, and apartments, are projected to reach 1,600 units in 2014, down 15 per cent from 1,876 in 2013, falling to 1,425 in 2015 and 1,400 in 2016.
Rising inventory, a slower employment expansion, and lower net migration are contributing to fewer multifamily starts in Regina this year, these factors will reduce housing starts further over the next two years."
President and CEO of the Regina Region Home Builders' Association said the CMHC forecast seems reasonable and agreed that the unsold inventory of new housing units is holding the Regina market back somewhat. "I think it's pretty close to the mark," they said.
President and CEO of the Regina Region Home Builders Association noted most of the unsold housing units are multi-family dwellings, either semi-detached or apartment-style units. On the single-detached side, that inventory ... isn't going to be a challenge for the market to turn over.
President and CEO of the Regina Region Home Builders Association added that Regina still has a "reasonably healthy market." "We're at very low risk of seeing a big housing price correction. But I don't think we'll see price escalation for quite a period of time."