In just one year, the Nova Scotia real estate market experienced some significant changes. Last year, the province was experiencing historically low interest rates and evolving consumer trends. Fast-forward to today, and it’s an entirely different picture, characterized by rising interest rates, declining sales, and higher prices.

According to the Nova Scotia Association of REALTORS®, residential sales fell 17.9 per cent in July compared to 2021, with 1167 units changing hands. Not only was this below last year’s sales numbers, but it was also 12.3 per cent below the five-year average and 0.6 per cent below the 10-year average for the month of July.

Year-to-date home sales have declined 18.2 per cent in the first seven months of 2021, compared to the same period a year ago.

How are prices performing? Like last year, the market is experiencing a low supply, further elevating already high prices. In July, the overall MLS® HPI composite benchmark price was $410,700 in July 2022, rising by 23.3 per cent compared to July 2021.

Expect these trends to continue in the coming months due to several factors. New listings continued to fall in July, with a minor decrease of 2.2 percent. There were 1,720 new residential listings, making it the lowest number of new listings added in more than 15 years. From a historical perspective, new listings were 4.2 per cent below the five-year average and 10.9 per cent below the 10-year average for July.

Activity Cools in These Nova Scotia Real Estate Markets

Here is a bird’s-eye view of how the real estate markets in the biggest Nova Scotia municipalities performed in July:

Annapolis Valley

  • Residential Sales: -12.7 per cent to 193 sales
  • Residential Average Price: 5.6 per cent to $307,479

Cape Breton

  • Residential Sales: 5.9 per cent to 126 sales
  • Residential Average Price: 18.1 per cent to $229,171

Halifax-Dartmouth

  • Residential Sales: -25.5 per cent to 511 sales
  • Residential Average Price: 12.3 per cent to $506,639

Highland Region

  • Residential Sales: -22.2 per cent to 42 sales
  • Residential Average Price: 27.2 per cent to $267,212

Northern Nova Scotia

  • Residential Sales: -8.0 per cent to 173 sales
  • Residential Average Price: 14.3 per cent to $259,750

South Shore

  • Residential Sales: -24.0 per cent to 98 sales
  • Residential Average Price: 16.8 per cent to $351,010

Yarmouth

  • Residential Sales:0.0 per cent to 24 sales
  • Residential Average Price: 14.1 per cent to $278,188

A Double-Edged Sword in Nova Scotia Real Estate?

The Nova Scotia economy has been one of the strongest in the country during the pandemic. Experts point to the province’s handling of the COVID-19 public health crisis as a reason why the east coast province weathered the storm about as effectively as any place can. Officials were able to get a grip on the situation early by prohibiting travel to other provinces, in tandem with stringent public health restrictions.

But, there is a new crisis to deal with: housing affordability. The province is experiencing a population influx of move-over homebuyers from across the country, local experts say new homebuyers could be priced out of the market. Kelvin Ndoro, a senior analyst with the Canada Mortgage and Housing Corporation (CMHC), told Reuters that homebuyers who came from major urban centres and sold their homes at a substantial profit possess a lot of equity, which many are using to buy cheaper homes in smaller markets. This contributes to an increase in housing prices, particularly in smaller local real estate markets across Nova Scotia.

The RE/MAX Halifax Housing Market Outlook (2021) forecast that average residential prices in the province’s capital would increase eight per cent to just below $400,000. Mid-way through 2022 and average prices for residential properties hit $506,639—a number that sits well above projections.

But prices may not keep moving on an upward trajectory. According to a new report by TD Bank, prices could drop by up to 25 per cent across the country, but it may be less pronounced in Nova Scotia. Population growth is a factor in keeping the prices in the province from dipping. With an overall price growth of about 60 percent since the onset of the pandemic, a 15 percent dip still represents numbers well over pre-pandemic levels.

Rising interest rates have cooled sales across the country, with national home sales falling by 5.3 per cent on a month-over-month basis in July. Many homebuyers and sellers are sitting on the sidelines, waiting to see what will happen with interest rates and if a price correction will come.

Still, Halifax and the broader province are considered to be undervalued Canadian housing markets. Could rising interest rates and an economy facing high inflation soften demand to more sustainable levels? For now, industry experts are keeping a close watch on the sizzling provincial market to better understand what to expect throughout 2022 and beyond.

Atlantic Canada’s Time to Shine?

For years, Atlantic Canada had been pushed out of the spotlight by more action-packed urban real estate markets like Vancouver, Toronto, Ottawa and Montreal. But then the COVID-19 pandemic struck, and the east coast real estate markets were turned on their heads, suddenly becoming one of the most sought-after home-buying destinations in Canada. This shift is fuelling incredible economic growth in the process.

As we move away from the COVID-19 pandemic and toward an uncertain economy, what will happen in Nova Scotia? Will prices become more affordable for local residents, or will Ontarians keep flocking to a province where their money goes much further? The market continues to face low supply and high demand, so new home construction will be another key metric to watch as we head into 2023.