Cooling but not freezing

By Janet Whitman 25 October 2022 Share this story

Rising interest rates have chilled demand, but experts say Halifax’s housing market continues to favour sellers 

Halifax has a housing shortage and the notion that property ownership is a sure-fired moneymaker deserves a big part of the blame. 

Economists call it “extrapolative expectations” — people expect recent trends to continue, regardless of economic factors that suggest otherwise. 

In the case of Halifax’s housing market, who could blame them? The average price for homes sold for the year-to-date through August in the urban core increased 66 per cent over past five years, according to the Nova Scotia Association of Realtors. At the same time, the number of homes available for sale is well below average. Vacancy rates for apartments remain at a record-low one per cent. Average monthly rents keep climbing. And demand is heating up again for Airbnb rentals as the world emerges from COVID lockdowns. 

During a boom, homebuyers often overestimate demand. During a bust, the opposite is true. The dynamic seems to be playing out in Canada’s two most expensive markets, Toronto and Vancouver, where prices are dropping as a jump in interest rates cooled the overheated buying frenzy during two years of COVID. 

In Halifax, prices and wild bidding wars have retreated since spring. After peaking at north of $600,000 in April, the average price is back down below $500,000. But observers think the city will remain a sellers’ market, with homes retaining much of their value, and likely gaining over the long term. 

Houses and condos here are still cheap in comparison to other small Canadian cities like Victoria, B.C. and Kitchener-Waterloo-Cambridge, Ont. And the market seems to have no shortage of buyers: locals scrambling to get in while they can, newcomers, and investors inside and outside of the province seeing an opportunity to make money on short-term or long-term rentals, with both in short supply. 

New research from the Bank of Canada early this year found investors are accounting for a bigger portion of the market here. But the buying, anything from people getting a second home to landlords looking for long-term or short-term rental properties, is still shy of the Canadian average. 

“I don’t see a crash coming or any weird adjustment,” says Jenna Ross, a property manager who started investing in rental properties with her husband a decade ago. “I think we’re just beginning. We’re the next big city that’s still affordable and very attractive to people.” 

Supply and demand

• 26% The drop in the number of homes sold, at 3,864 for the year through August versus 5,238 over the same period last year, reflecting the tight supply 
• 19% Mortgaged home purchases by investors last year, up from around 14 per cent in 2014, but below the nearly 22-per-cent Canadian average 
• 18% The surge in rent for a two-bedroom from a year ago to $2,090 a month 
• 1,026 Number of Airbnbs for rent at the end of August, rebounding to August 2019’s 1,302 after dropping to 777 in August 2021 during the pandemic 
• 85% The occupancy rate for Airbnbs in July 

Sources: Nova Scotia Association of Realtors, Zumper, AirDNA