After witnessing a meteoric ascent in home prices, has the Halifax housing market stabilized?
Many first-time homebuyers looking to enter the housing market in a major urban centre that is undoubtedly growing are hoping so. And some of the data support affordability is improving. But for how much longer will this be the case?
Indeed, a lot has changed in the Atlantic Canada real estate market since the coronavirus pandemic. What was once a depressed housing sector has quickly transformed into a prime real estate market. But the momentum and potential might all depend on the economy. Can Halifax eventually rival other big cities in Canada?
Surprisingly, it might not depend on residential real estate but rather the commercial real estate market.
An Update on the Halifax Housing Market
According to the Nova Scotia Association of Realtors (NSAR), residential property sales plummeted 41.3 percent in March, totalling 337 units. On a year-to-date basis, the Halifax real estate market has endured a 30.7 per cent year-over-year decline in sales, with 844 units.
Association data reveal that housing prices have come down considerably compared to the same time a year ago. The average residential price tumbled nearly ten percent to $542,198 in March. In the first three months of 2023, the average residential price fell more than eight per cent to $538,543.
But how does this compare to the rest of the province?
In the Nova Scotia real estate market, residential property sales fell close to 39 per cent, totalling 725 units. Home sales were also down 33 per cent on a year-to-date basis, totalling a little more than 1,800 units. The average price of homes sold in the provincial housing sector fell 10.5 per cent to $404,912 and seven per cent year-to-date to below $398,000.
Ultimately, according to NSAR figures, these are below-average results for the month of March.
But prices could be on an upward trajectory in the coming months as the sales price is forecast to climb about eight percent this year, according to the 2023 REMAX Housing Market Outlook.
Will Commercial Real Estate Hurt Halifax?
With the influx of capital and population during the coronavirus pandemic, city officials took advantage of the situation by creating more development in Halifax. From better infrastructure to redevelopment, Halifax wanted to not only retain the increased number of people and businesses, but it wanted to attract even more households and companies to the Maritime city.
But there was something that some experts did not anticipate: The decline of the commercial real estate market.
The Commercial Board of Real Estate (CBRE) released its Canada Real Estate Market Outlook for 2023, and the report described Halifax’s office space market as “dynamic.”
“I look at the office market and the fundamentals have really returned to pre-pandemic conditions in terms of overall vacancy,” said Andrew Bergen, Atlantic region market leader for CBRE. “That said, we do anticipate a slight uptick in sublease space in the office market over the next 12 months, coupled with companies likely committing to less space to accommodate employee flexibility while implementing those new workplace models for the future.”
Moreover, being a port city, Halifax possesses a key advantage over many of its Canadian counterparts. Since the global supply chain is being reconfigured, there has been a renewed focus on Atlantic Canada. So, not only could Halifax witness a resuscitation of its office environment, but it could be a crucial hub for shipping, distribution, and warehousing.
“You look at Atlantic Canada and the population growth, the portability and overall desirability to live and invest in Atlantic Canada has really positioned the region well for future growth,” said Bergen. “Not to say we are completely sheltered from the expected downturn, but the level of activity we’re seeing in Q1 is certainly promising.”
The Halifax Chamber of Commerce is also intervening, requesting a hybrid work model approach, urging offices to have employees in a centralized location three to four days a week to “help stimulate the downtown area.”
Patrick Sullivan, president and CEO of the Halifax Chamber of Commerce, thinks this could result in as much as $4 million in a spending boost in the downtown core.
“Downtowns are the core of our economy, particularly Halifax’s economy,” he said in an interview with Global News. “We’d like (workers) to come downtown three to four days a week, frankly, to spend more money. To spend more money on restaurants, and in shops. Anything to stimulate that downtown economy.”
But will this bode well for the Halifax real estate market and the Nova Scotia housing sector?
For a city that is attempting to transform into a key economic hub in Atlantic Canada, officials may need to craft a plan to resuscitate the downtown core so the rest of the Halifax economy, including the real estate market, can maintain the momentum of the last few years.