Prairie Housing Markets Respond Differently to Oil Price Decline

CALGARY — Canada Mortgage and Housing Corporation (CMHC) released its latest Housing Market Insight (HMI) report on the economic structure of the Prairie Provinces and the impact of low oil prices on Alberta, Saskatchewan and Manitoba housing markets.
The decline in oil prices will impact each Prairie province differently. Alberta’s economy and to a lesser extent, that of  Saskatchewan make these two provinces vulnerable to an oil price shock. Manitoba’s economy, which is more diversified with a relatively smaller oil and gas industry, tends not to experience as much of an impact on its housing market.
Low oil prices have reduced investment and employment and slowed economic growth in Alberta and Saskatchewan. This has decreased housing demand and created housing market conditions that favour buyers in Alberta and Saskatchewan. Meanwhile, Manitoba which has a more diversified economy is experiencing more balanced market conditions.
In Alberta, after declining 21 per cent in 2015 to 56,477 units, MLS sales are on pace to decline for a second consecutive year by around 11 per cent in 2016. Saskatchewan is responding to low oil prices in a similar fashion, with resales on pace to decline for a second consecutive year. Conversely, Manitoba is on track for its third consecutive year of growth in MLS sales.
In the Prairie region, Alberta is experiencing the sharpest declines in housing starts, followed by Saskatchewan, while Manitoba is experiencing a more muted decrease.