Prices Continue to Rise in the Nova Scotia Real Estate Market

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 elevated interest rates, historically mixed sales and rising prices.

In February, the number of residential property sales advanced more than 12 per cent year-over-year, totalling 668 units, according to the Nova Scotia Association of Realtors (NSAR). Home sales were a little more than 15 per cent below the five-year average for this time of the year and 3.4 per cent below the 10-year average. In the first two months of 2024, home sales climbed nearly 11 per cent, with close to 1,200 units exchanging hands.

Real estate association data show that prices have been trending higher. The MLS® Home Price Index (HPI), which is considered a more reliable metric than the average of median measurements, advanced at an annualized rate of 4.7 per cent to $392,100. The average price of homes sold in February swelled about five per cent year-over-year to $423,664.

Townhome prices also jumped 12.5 per cent to $513,400, while apartment prices gained 4.2 per cent to $444,300.

Lacklustre supplies have fuelled the upward trajectory for Nova Scotia real estate prices. While the number of new and active listings rose 16 per cent and 29 per cent, respectively, they are below the historical averages.

New listings were 13.5 per cent below the ten-year average for the month of February, and active listings were approximately 42 per cent below the ten-year average. The positive news is that the number of months of inventory, which measures the number of months it would take to exhaust current housing stocks at the present rate of sales activity, rose from 3.8 months in February 2023 to 4.4 in February 2024.

In addition, new housing construction activity has been solid in the first quarter of 2024. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts rocketed 240 per cent to 963 units in February. Year-to-date, housing starts have exceeded 1,400 units, compared to just 492 in the first two months of 2023.

Activity Cools, Home Prices Heat Up

In the broader Nova Scotia real estate market, it can be summarized this way: sales activity has been mixed while prices have been heating up.

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

Annapolis Valley

• Residential Sales: -1.2 per cent to 79 units
• Residential Average Price: -0.2 per cent to $323,246

Cape Breton

• Residential Sales: +10 per cent to 44 units
• Residential Average Price: +8.1 per cent to $232,595

Halifax-Dartmouth

• Residential Sales: +14.8 per cent to 334 units
• Residential Average Price: +4.2 per cent to $561,454

Highland Region

• Residential Sales: -12 per cent to 22 units
• Residential Average Price: +10.6 per cent to $321,660

Northern Nova Scotia

• Residential Sales: +27.3 per cent to 112 units
• Residential Average Price: +3.3 per cent to $258,441

South Shore

• Residential Sales: -11.3 per cent to 55 units
• Residential Average Price: +24.1 per cent to $347,826

Yarmouth

• Residential Sales: +175 per cent to 22 units
• Residential Average Price: -15 per cent to $207,218

Last year, the NSAR noted that 10,333 units were sold in the Nova Scotia housing market, down more than 17 per cent from the previous year. Average prices enjoyed a modest increase of nearly three per cent.

2024 Could be Big for Nova Scotia

Nova Scotia is expected to experience a huge year, and this is not only due to the housing market.

TD Economics recently updated its provincial economic forecast and upgraded its growth outlook for Nova Scotia. The real gross domestic product (GDP) is projected to climb 1.5 per cent in 2024 and 1.3 per cent in 2025. Existing home prices are anticipated to surge 4.5 per cent this year and 3.6 per cent in 2025. Home sales are also expected to rise 7.4 per cent in 2024 and 8.9 per cent in 2025.

“The higher backdrop for interest rates in recent years has only managed to slow the previously torrid pace of home price growth in Nova Scotia. Indeed, as of February, home prices were still 65 per cent above their pre-pandemic level, one of the largest gaps in Canada,” said bank economists wrote in a comprehensive research note.

“With economic growth likely to proceed at a near-trend pace, resilient job markets and supply/demand balances signalling that housing markets remain tight, prices are likely to continue rising over the forecast horizon. High home prices, alongside the boost coming from Nova Scotia’s decision to drop its portion of the HST on the construction of purpose-built rental units, should keep homebuilding elevated.”

Despite the current conditions and expectations over the next couple of years, Halifax and the broader province are considered to be undervalued Canadian housing markets. By comparison, the national average price for a home is nearly $700,000, with much higher prices in major urban centres, such as Toronto and Vancouver.

Canada’s “Best Kept Secret” Is Out

Like Alberta, Atlantic Canada had been the nation’s “best-kept secret,” but the cat’s out of the bag and families are flooding to the country’s eastern seaboard.

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.

The market continues to face low supply and high demand, so new home construction will be another key metric to watch as we progress into 2024.