Economic Uncertainty Holding Back Alberta Developments
“Lower oil prices have created economic uncertainty in Alberta and Saskatchewan. This will hold back growth in housing starts in both of these provinces in 2015 and 2016 before improving economic conditions provide some gains in 2017.” Lai Sing Louie, CMHC’s Regional Economist stated on Thursday.
“The economic and housing market outlook for the Prairie region continues to be adversely impacted by low commodity prices.”
The Canada Mortgage and Housing Corporation has released their Prairie Highlights from the 4th quarter edition of 2015’s Housing Market Outlook. The document highlights a significant trend in housing starts for 2016, showing a decline in all three of the prairie provinces.
Housing starts are expected to see a decline across the prairies.
[CLICK HERE to read up on Housing Starts and their economic significance as outlined by CNBC.]
While 2015 housing starts are estimated at 48,600 they are expected to dip as low as 32,900 potentially in 2016. Starting in 2017, however, these numbers are projected to increase up to 51,200. Alberta will see the largest decline throughout 2016, while Manitoba and Saskatchewan are predicted to stabilized earlier.
In Alberta specifically, the 2015 number will be closer to 37,200; that’s an 8% decline from 2014. The province will see a 2016 drop to as low as 23,700 or as high as an optimistic 35,900. Economic factors make predictions into 2017 difficult with a large variable range from 23,400 to 37,200.
According the the CMHC Prairie Highlights,
“Economic uncertainty has lowered resale transactions in oil-producing areas. In Alberta, resale transactions are projected to decline approximately twenty per cent in 2015. With oil prices assumed to gradually rise over the next two years, resales are forecasted to gradually improve to range between 53,700 and 63,500 in 2016 and between 54,400 and 65,600 in 2017.”
The larger overall impact of this unique real estate environment means conditions will favour the buyer in Alberta in particular and also Saskatchewan. A major contributing factor includes predictions of lower residential prices. Average sale prices for 2016 are expected to fall between $373,000 and $409,600. A rebounding 2017 is predicting this range to grow from between $379,00 to $419,800.
The following chart published by the CMHC offers a statistical breakdown of prairie province predictions:
