Be it the St. John’s housing sector or the Halifax real estate market, Atlantic Canada has closed out a smoking hot spring. With economic growth, population gains and soaring housing activity, Halifax and its regional partners are experiencing a boom unseen in decades. But will it be short-lived, or is there still plenty of gas left in the tank?
Global market analysts have stressed that conditions will eventually normalize and return to pre-pandemic levels – and this includes the Canadian real estate market. Whether through higher interest rates or federal government intervention, places that are not accustomed to such red-hot conditions might return to what was seen before February or March 2020.
Despite these warnings, it is challenging to think that the Halifax real estate market could be in for much cooling.
Perhaps a peek inside Halifax’s spring real estate market will give us some insight into what the third quarter of 2021 will look like for homebuyers, owners and sellers.
Halifax Real Estate Closes Out Above-Average Spring Season
According to the Nova Scotia Association of REALTORS®, residential sales soared 60 per cent year-over-year in May, totalling 765 units. Year-to-date, the Halifax real estate market has witnessed an annualized 56-per-cent increase in residential transactions, coming in just below 3,500.
Prices have experienced significant growth, too. In May, the average residential price in Nova Scotia’s capital ballooned 29 per cent year-over-year to $466,633. In the first five months, the average price for properties in Halifax gained 34.4 per cent compared to the same time a year ago, totalling more than $462,000.
The broader provincial housing market is experiencing the same supply-and-demand issue as the rest of the Canadian real estate market. This is evident in the listings and inventory numbers. While the number of new listings advanced 24.3 per cent from May 2020, active residential listings recorded a sharp 39.6-per-cent decrease from the same time a year ago.
In fact, active residential listings have not been this low in the month of May in more than 30 years. Moreover, active listings were 56.6 per cent below the five-year average and more than two-thirds below the 10-year average.
Months of inventory clocked in at 1.8 to close out May 2021. This is down from 4.9 months last year. It is also below the long-run average of 6.9 months that’s typical for this time of the year. This is a crucial measurement since it tracks the number of months it would take to sell the present housing stock at the current rate of sales activity.
Is new housing supply coming to the market? The latest Canada Mortgage and Housing Corporation (CMHC) data highlighted that housing starts picked up 116 in April, up from 85 at the same time a year ago. Year-to-date, housing starts have advanced 904, up from 678 in the first four months of 2021.
Will the broader Atlantic Canada real estate market begin to ease, or is there more room for growth?
Why the Halifax Real Estate Market Will Continue to Grow
Many industry observers have warned that the post-pandemic economy will see the Canadian real estate stabilize and return to its pre-pandemic days. This means that, while the major urban centres will likely continue to see growth, some smaller cities, suburbs and rural communities could return to pre-pandemic conditions. But does this same conclusion apply to the likes of Halifax?
Even prior to the COVID-19 public health crisis, Halifax had been making investments to transform the Atlantic Canada city into an economic engine in Canada, with funding across the provincial capital from the municipality or the federal government.
More businesses are targeting Halifax, especially now that the region has seen an explosion in population growth after years of declining numbers. Smaller communities are unlikely to experience an influx of new companies establishing corporate operations. However, Halifax is beginning to garner the attention of the private sector.
Tad Mangwengwende, a senior analyst with Canada Mortgage and Housing Corp. (CMHC), contends that the Halifax real estate market will likely not endure a downturn as the coronavirus pandemic wanes. According to the CMHC official, easing public health restrictions might apply even more pressure on the city’s red-hot housing market.
“That’s in a period where we didn’t have international students, we didn’t have international migrants, so when we look at what happens in a more normal environment, when those people come, they will again need to be housed somewhere,” he said in an interview with CBC radio. “We’ve had higher interprovincial migration, we have elevated levels of intra-provincial migration — so we still have people moving from rural to urban areas — and we also have higher retention rates for immigrants.”
Does this mean the housing affordability crisis may intensify on the nation’s east coast?
Whatever the case, despite the economic impacts spurred by the once-in-a-century pandemic, Atlantic Canada is looking to capitalize on the so-called new normal and take advantage of whatever opportunities are available.
If the future of the Halifax economy looks bright, perhaps the time is now for businesses, investors, and new residents to embrace the east coast life (and get accustomed to being one hour ahead)!