Saskatchewan is well positioned to be among Canada’s top economic performers. Potash prices remain elevated and the province should benefit from increased output following a strike in 2008. The province’s commitment to infrastructure spending will also stimulate capital investment, as will a number of private sector projects.
These include two major potash mine expansions and the $1.9 billion CCRL (Consumers’ Co-operative Refineries Limited) refinery expansion in Regina.
In 2008, employment growth reached two per cent for the second consecutive year, well above historical averages. Employers are expected to be more conservative in expanding payrolls. Despite slowing growth rates through 2010, Saskatchewan’s employment expansion will be among the strongest in Canada.
However, declines in uranium, crude oil, and agriculture prices will contribute to the moderation of economic growth during 2009. Modest job gains will also dampen consumer spending growth, despite recent provincial income tax cuts.
The relatively favourable economic environment will maintain strong levels of net migration, notes Martin Lapedus, although the recent escalation in provincial house prices and rents may serve as inhibitors.
In 2007 and 2008, Saskatchewan had the highest provincial growth rates for the average resale price, new house price index (NHPI), and apartment rents.
Overall economic prospects, combined with favourable net migration, will translate into a decline in total housing starts and MLS® sales.

In Detail

Single Starts: The surge in building activity in 2007 and 2008 has led to a rapid rise in the supply of singledetached housing. With complete and unabsorbed inventories up sharply, a significant reduction in the pace of construction will be required this year to reduce these inventories to manageable levels.
Builders will have an opportunity for modestly higher production in 2010, provided inventories reach their peak some time this year.

Multiple Starts: With elevated construction levels in the last few years, the supply of condominium units has also reached record highs.
Given the expectation of rising inventories, builders will adjust the pace of construction moving forward. After a 25-year high in 2008, a decline in production is expected this year. Assuming inventories are managed appropriately, developers will see modestly higher starts in 2010.

Resales: Saskatchewan’s recent price gains hindered resale demand in the second half 2008, contributing to a rise in inventories and month-overmonth price reductions. In line with economic conditions, residential sales will face further moderation in 2009, with activity down 15.7 per cent. Toward year-end, price declines and a large number of listings will provide opportunities for buyers. This will provide some support to sales. Under these conditions, sales will stage a modest rebound through 2010.

Prices: After leading provincial growth in 2007 and 2008, the average resale price will see little increase over the next two years. An excess supply of listings and strongly motivated sellers has resulted in recent month-over-month price declines. In this environment, the average price will most probably decline by a few per cent this year. Once resale listings moderate and sales improve into 2010, price growth will slowly improve.