Real estate uncertainty has seeped into January 2024, and buyers in the Halifax housing market are banking of the prospect of lower interest rates down the road to revitalize home-buying activity. Demand remains relatively healthy in hot pocket areas, where well-priced properties are selling in short order, but in areas where greater selection exists, turnover is slow. Given the current high interest rate environment, many buyers are choosing to stay in place until the first interest rate cut is announced. Once that occurs, it’s expected that buyers will enter the market in full force, hoping to get in before prices increase.
Immigration and in-migration have factored into the housing equation, with both ramping up significantly since 2020. According to Statistics Canada, Nova Scotia’s population rose five per cent between 2016 to 2021, settling in at just under 970,000, with the provincial government committed to doubling the population to two million by 2060. In 2023, more than 5,300 interprovincial migrants and over 20,000 immigrants moved to Nova Scotia in the first three quarters of the year – the vast majority settling in Halifax – according to Statistics Canada Quarterly Demographic Estimates, Provinces and Territories Interactive Dashboard. The increase came as a surprise, driving upward momentum in housing values, as buyers from other provinces and countries arrive flush with cash, outspending the average Halifax buyer in large part due to stronger buying power.
Inventory levels have improved significantly over one year ago, but less than 1,000 homes are currently listed for sale. First-time buyers in the Halifax housing market are finding it particularly stressful as of late to compete for homes in the sweet spot – priced from $350,000 to $500,000. Some are moving between one and two hours outside of Halifax to take advantage lower house prices. With remote work increasingly accepted, the necessity to be located in Halifax has waned. Halifax urbanization and development in recent years is also a factor, with traffic, construction, and increased congestion prompting buyers to look at areas outside the Halifax Regional Municipality.
Residential Assessments Up 21.1% in Halifax Housing Market
Taxation has played a greater role in the market this year, according to RE/MAX Canada’s 2024 Tax Report, as new reassessments mailed out in January reflected strong growth in housing values over the Covid years. Residential assessments are up about 20 per cent over last year, one of the largest increases in the history of the province. Numbers vary by community or municipality, with Halifax up 21.1 per cent. In addition, the new reassessments will not be capped after the sale of a home, which could see property taxes increase further for the next buyer.
Deed transfer tax at 1.5 per cent on purchases in the Halifax housing market is an on-going hardship for first-time buyers, although there has been a first-time buyer plan in place that allows them to repay the debt over a longer period. This is woefully inadequate at a time when it’s important to incentivize the first domino. However, unlike other major areas of the country, housing values are still relatively affordable here. First-time buyers are laser focused on home ownership as rental rates rise. Many spend years saving 10- to 20-per-cent down payments, only to be told they owe another 1.5 per cent upon closing, in addition to all other closing costs. The combination of reassessment and the deed transfer tax have also prompted some buyers to stay in place, especially at higher price points. Many are choosing to renovate rather than move. For non-residents, Nova Scotia charges a five per cent Provincial Deed Transfer Tax.
Prices were up over 2022 at year-end 2023, sitting at $552,700 (up from $536,700 one year prior). Supply issues, like in other parts of the country, exist and while development fees and approvals are slow and far between, there are more condominiums and freehold properties being added the city’s housing stock. However, it is estimated that the Halifax market is still 30,000 to 35,000 units short of what the city needs, given the governments vision for growth. Under the present conditions, prices are expected to continue rising in the year ahead, with sales increasing in tandem with falling interest rates.
Methodology for Deed Transfer Tax in Nova Scotia
Deed Transfer Tax in the Halifax Regional Municipality for residents is 1.5 per cent on purchase price.
Deed Transfer Tax in Nova Scotia for out of province/country buyers is 5 per cent on purchase price.
