CALGARY – Falling oil prices is creating market uncertainty in the Calgary real estate market. The impact is being felt across Alberta and the Prairie Provinces.
“The trend in total housing starts in Calgary continued to decrease in January,” said Felicia Mutheardy, CMHC’s senior market analyst for Calgary. “Rising supply in the existing home market, along with moderating employment gains and slower migration in-flows, has contributed to the decline in production.”
Lower oil prices will have a dampening effect on investment and economic growth, particularly in Alberta and to a lesser extent Saskatchewan. This will contribute to slower employment growth and net migration, in turn slowing housing demand. With key drivers less supportive of housing demand and supply levels elevated in some markets, housing starts in the Prairie region are expected to decline in 2015 and 2016,” said Lai Sing Louie, CMHC’s Regional Economist.
In Alberta, housing starts will decrease from 40,590 units in 2014 to 36,000 in 2015 and 34,500 in 2016. In Saskatchewan, housing starts will decline from 8,257 in 2014 to 7,300 in 2015 and 7,200 in 2016. In Manitoba, starts will remain close to 2014 production and remain relatively stable with 6,300 units in 2015 and 6,300 in 2016.
While the large number of migrants to the Prairie region over past years will support sales in the resale market, economic uncertainty created by declining oil prices will impact employment and temper demand. In Alberta, after increasing by over nine per cent to 71,773 in 2014, MLS® sales will decrease to 71,100 in 2015 before edging higher to 71,600 in 2016 as economic conditions improve. In Saskatchewan, MLS® sales are forecast to decrease from 13,868 in 2014 to 13,600 sales in 2015 and remain near this level in 2016. MLS® sales in Manitoba are projected to edge higher from sales of 13,782 in 2014 to 14,000 in 2015 and 14,200 in 2016 as employment growth increases.
