Housing Affordability Falls

Commentary, Frontier Centre, Housing Affordability, Media Appearances, Poverty, Regulation, Saskatchewan

Housing affordability has eroded dramatically in Saskatchewan’s two major cities during the last two years, says an international survey released by the Frontier Centre for Public Policy.

Saskatoon is classified by the centre as seriously unaffordable, with a survey rating of 4.6 — the years of average household income required to buy a house. Two years ago, Saskatoon’s affordability number was 2.6.

Regina is considered moderately unaffordable with a rating of 3.5, up from 2.0 two years ago.
The worst category is “severely unaffordable,” with ratings of five and up. The Canadian average was 3.5 years in the third quarter of 2008, when the survey was done.

The fifth annual Demographia International Housing Affordability Survey evaluated 265 housing markets in Canada, Australia, Ireland, New Zealand, the United Kingdom and the United States. The survey was released in Canada by the Frontier Centre.

The survey used a median Saskatoon house price of $256,800 and median household income of $55,900. Saskatoon is ranked 182nd out of 265 on the international list, and 27th out of 34 cities for affordability in Canada.

They used Regina’s household income of $60,800. Its international rank is 121st, and its Canadian rank is 18th.

While Saskatoon is not in the worst category, no other city has tacked two years of income onto the price of a home in the last two years, said David Seymour, director of the Frontier Centre’s Saskatchewan office.

“In any economic market there is supply and demand, and everybody talks about the demand side in Saskatoon having an economic boom better than in any time in history,” said Seymour in an interview Wednesday. “The supply side for housing just hasn’t responded the way that we might hope.”

Regina is in “the same space,” having changed from an affordable city two years ago to an unaffordable one.

“They, too, have broken out of that traditional two- to three-year income to buy a house boundary.”

There is no reason why housing should become such a huge portion of income, said Seymour, while vehicles, electronics and other items are getting cheaper in terms of the amount of people’s labour required to pay for them.

The Frontier Centre largely blames restrictive municipal land development for driving up housing prices. A survey of 250 U.S. cities showed housing affordability was related to the extent that municipal governments restrict land development, said Seymour.

“I would review everything to do with new house development,” said Seymour, including land availability, zoning and purchasing procedures, and whether labour restrictions are an issue in housing development.

Rick Howse, the city of Saskatoon’s land branch manager, said land availability is not an issue in Saskatoon. Saskatoon, unlike most municipalities, has a land bank and sells land to individuals and developers.

“We don’t restrict land,” said Howse. “If somebody wants to develop land, and they’ve got the money and the raw land, they can do it, as long as it’s within the direction of growth — which the city is responsible to ensure occurs because the city provides the major infrastructure.

“The city as a major land developer at the end of the year had roughly 400 lots available for sale, and I understand in the private sector that they had a similar number, probably in the order of 340, 350 lots available to builders.”

There have been lot price increases during the last couple of years, said Howse, but they have been driven mainly by the cost of servicing, which requires oil, concrete, steel, asphalt, pipe and labour.

“If the market wants the lots, and the market has been telling us for the last couple of years that they want them, we develop them,” said Howse. “We’re required to operate this on a business footing, a business case.”

He added that it takes 16 to 24 months to bring land onto the market because of the time required for servicing.


– The least affordable markets were Australia’s Sunshine Coast, with a 9.6 multiple median rating; Honolulu, Hawaii, at 9.1; the Gold Coast of Australia, at 8.7; Vancouver, B.C., at 8.4; and Sydney, Australia, at 8.3.

– Of the Western Canadian cities, Winnipeg was the only one considered affordable, with a 3.0 median.

– Calgary came in at 4.8 and Edmonton at 4.2. All of the B.C. markets were considered unaffordable.

– All 87 affordable cities were in the United States and Canada. Most of the least affordable markets were in Australia, New Zealand, Ireland and the U.K.