Real Estate

Halifax’s housing market continued to be tight in 2023. However, pressure lessened somewhat: overall housing starts continued to climb, developers leaned into the multi-residential subsector, and the rise in housing prices decelerated. Among Canada’s 20 largest cities, Halifax had the fastest rate of housing-start growth, rising by 37% over 2022 values. The 4,657 housing starts in 2023 was the largest annual number on record since 1989.

This aggregate number masks interesting economic movement within the city and its housing subsectors. Single-unit starts have continued their downward trajectory since 2020. There were 529 starts in 2023, below the 10-year average of 710 units per year. Single-unit housing starts primarily took place in the area defined by the Canada Mortgage and Housing Corporation (CMHC) as the Rest of Halifax, which includes areas outside the Peninsula, Mainland Halifax, Dartmouth, and Bedford/Sackville. In 2023, 455 (86%) of single-unit starts took place in the Rest of Halifax.

Meanwhile, multi-unit starts more than made up for the decline in single-unit starts. There were 4,128 multi-unit starts across Halifax in 2023 – an increase of 1,516 units (+58%) over 2022. Multi-unit starts were distributed more evenly across the city, with hundreds of new units in each of Mainland Halifax (781 starts), Dartmouth (1,089), and Bedford/Sackville (370). While the Peninsula saw roughly the same number of new starts as in 2022, it remains the second-largest source of new multi-unit starts (975) behind Dartmouth.

According to the Canadian Real Estate Association (CREA), the benchmark price¹of a home decreased by 5.9% between 2022 and 2023 across Canada. This is in sharp contrast to the 12.3% increase between 2021 and 2022. Across benchmark cities, Halifax was in the middle, with the fifth-most affordable average price and the fourth-fastest increase in price from 2022 to 2023. In 2022, Halifax experienced the fastest growth in benchmark prices (+17.2%), while Winnipeg experienced the slowest growth (+7.0%).

Over the longer term, Halifax’s average home price²continued to decelerate in 2023 though price levels were dramatically higher than a decade ago. The average home price in Halifax was $550,605 in 2023, more than double the 2014 figure of $275,283. Since 2014, Halifax has seen a compound annual growth rate (CAGR) of 8.0%. However, prices increased by only 2.8% in 2023, well below the 14.9% growth rate in 2022 and 27.4% in 2021.

Elevated interest rates and strong population growth that continued to outstrip construction activity combined to exert significant pressure on Halifax's rental market, which has remained at a historically low 1.0% vacancy rate since 2021.

Consistently low vacancy rates have put upward pressure on rents as more renters compete for the few available apartments. In 2023, the average rent in Halifax was $1,538 per month. The average rent increased by 8.4% in 2022 and 13.5% in 2023. The Government of Nova Scotia imposed a rent-increase cap of 2.0% in 2020, but this applies only to existing tenants. The average monthly apartment rent has increased by $602 since 2014, reflecting declining rental affordability over the longer term.

Rent increases are not isolated to Halifax’s downtown or even the Peninsula. Every region within Halifax saw rent increases between 2022 and 2023. Even the region with the lowest rent increases, Halifax Mainland, saw a 12.1% increase last year. In regions such as Bedford/Sackville and the Rest of Halifax, these increases hit 21.6% and 16.6%, respectively. A deeper look at how these rents vary within Halifax – and how this has evolved over time - can be found in the Communities section.

Rental-affordability pressures are not unique to Halifax. Halifax’s average monthly rent ($1,538) placed it in the middle of benchmark cities. Toronto had the highest monthly rate ($1,830), while Quebec City had the lowest ($1,002). Across benchmark cities, vacancy rates ranged from 0.9% in Vancouver and Quebec City to 2.2% in Ottawa.

With respect to different types of apartments, Halifax remained in the middle of benchmark cities and sixth-most expensive in terms of rental rates for bachelor, one-, and two-bedroom apartments. However, it was third-most expensive in three+ bedroom apartments. Bachelor apartments in Halifax averaged $1,113 per month in 2023, while three+ bedroom apartments averaged $1,982 per month.

High levels of construction activity and especially increased multi-unit starts may lead to higher vacancy rates and easing rental pressures in the future. However, Halifax is currently experiencing historically low availability and is seeing commensurate deterioration of rental affordability.

Mortgage rates increased sharply in 2022 and remained elevated through 2023.

Nonetheless, Halifax and its benchmark cities showed no signs of a rise in mortgage defaults or delinquency rates. In 2023, Halifax’s mortgage delinquency rate was at its lowest on record at 0.12%, basically unchanged from 0.13% in 2022. In fact, delinquency rates remained the same across the ten benchmark cities in 2023 and 2022. Over the longer-term, Halifax’s delinquency rate has fallen from 0.47% in 2014 to 0.12% in 2023.

Having a low delinquency rate does not mean that mortgages have remained affordable. Looking at new and refinanced mortgages issued in 2023, the average mortgage payment in Halifax reached a record high of $1,781 per month. This was $249 (16%) higher than in 2022 and $658 (59%) higher than 2014. Across Canada, Halifax had the sixth highest average mortgage payment in 2023. This was well below Vancouver’s $3,121 but above Quebec City’s $1,125.

Mortgages and home equity lines of credit (HELOCs) make up the largest shares of monthly credit payments for Halifax debtholders, with mortgage payments at $1,330 per month (43% of payments) and home equity lines of credit at $618 per month (20%).

Mortgages have become increasingly expensive for homeowners in Halifax, but in 2023, Halifax debtholders showed no signs of increased defaults or delinquency.

The number of housing starts in Halifax jumped in 2023 after declining in 2022. There were 4,657 starts in 2023, up 37.5% from 3,387 in 2022. This is a considerable rebound from the 10.7% decrease between 2021 and 2022. However, the large increase in starts has not yet translated to an increase in completions. Halifax’s 2,954 completed units in 2023 were just below the 3,061 completions in 2022 (-3.5%). Given there were 19,237 more people living in Halifax in 2023, the pace of completions will have to increase further to relieve pressure on the housing market.

The record number of housing units entering Halifax’s construction pipeline meant increased competition for building materials, equipment, and labour. Statistics Canada’s Building Construction Price Index³for residential buildings in Halifax increased by 8.3% between 2022 and 2023. Since 2017, residential building costs increased by 55.8% or a compound annual growth rate of 7.7%.

On the non-residential side, construction costs have risen consistently but at a more moderate pace than in the residential sector. The Building Construction Price Index showed non-residential costs in Halifax increasing by 5.6% between 2022 and 2023. Since 2014, non-residential construction costs have increased 39.5% or a CAGR of 3.8%.

Halifax set a record in 2023 for investment in non-residential building construction. This figure increased from $473 million in 2022 to $601 million in 2023, a jump of 27.2%. Most of this increase came from a 140.8% increase in the institutional and governmental subsector (e.g., hospitals, schools, power grid, ports, government buildings). Construction investment in the commercial subsector saw a 17.1% increase, while the industrial sector declined by 2.4%.

There also was a dramatic increase in 2023 in the value of non-residential building permits⁴in Halifax. Building permits provide a more leading (though speculative) indicator of construction activity as developers procure land and obtain the legal rights to build properties in the future. The aggregate value of building permits issued for new non-residential construction in 2023 was $316 million, nearly double (+90%) the $166 million in 2022. This is in addition to the $257 million for structural improvements in 2023.

Halifax’s office and industrial markets reflect notably different market conditions. The office market continues to have elevated vacancy rates and stable rent levels. In contrast, the industrial vacancy rate remains very low and average rent has risen sharply; however, significant new construction activity may temper these trends going forward.

In terms of availability, Halifax’s downtown office vacancy rate decreased from 19.4% in 2022 to 18.3% in 2023. In the suburbs, the vacancy rate declined to a more modest 12.2% in 2023 from 12.9% in 2022. These high vacancy levels mean there has been essentially no movement in office rents. Average rent for downtown office space was $16.59psf in 2023, unchanged from 2022, while suburban office space was $14.67psf in 2023, up very slightly from $14.65psf in 2022. Since their recent lows in 2017, compound annual growth rates for downtown and suburban office rent were 2.2% and 1.3%, respectively.

Halifax offered among the most affordable Class-A office space in Canada. Across the eight benchmark cities for which data were available, Halifax had the second lowest average Class-A net rent (at $18.13psf) and the second highest vacancy rate (at 19.6%). Only Calgary had lower average rent and a higher vacancy rate.

The story could not be more different in the industrial market. Industrial vacancy inched up from its historic low of 1.9% in 2022 to 2.2% in 2023. In the last year alone, the average industrial rent jumped 18%, rising from $8.87psf in 2022 to $10.49psf in 2023. This increase (+$1.61psf) nearly tripled Halifax’s previous record for a single-year increase in industrial rent (+$0.55psf), which occurred between 2021 and 2022. Among the eight benchmark cities for which data were available, Halifax’s vacancy rate was positioned in the middle at fifth highest, while average net rent was the lowest among benchmark cities.