Halifax sees rise in apartments starts, average rents
The chronic undersupply of housing is set to ease in 2025 and 2026, but demand will still outstrip it, according to CMHC.
“We still expect demand to be higher relative to any increase in supply,” Kelvin Ndoro, Halifax regional lead economist at the Canada Mortgage and Housing Corporation said.
And rising costs for landlords will drive rents even higher. “We expect rents to go up and because property owners are being faced with higher operating costs,” he said.
“Since interest rates are higher, they (owners) are renewing their mortgage at a much higher rate. All that increasing cost would translate into higher rents.” Ndoro said.
As of February, this year, 8,765 rental units are under construction in the Halifax Regional Municipality. The average rent for a two-bedroom apartment in 2023 was $1,775, nearly $150 higher than the previous year. And the vacancy rate barely budged.
A 2023 survey of Halifax renters indicated that the largest increase in average monthly rents within the HRM occurred in Bedford and Lower Sackville, where they rose by about $300 a month, compared to 2022.
The population growth in HRM is also at a record high. In 2022, 21,000 people moved to Halifax, according to Halifax Index 2023, released by the Halifax Partnership. Ndoro said around 40 per cent of newcomers are renters. In 2023, 2,200 units were completed. With a vacancy rate of only about one per cent, approximately 1,800 people are expected to be hard-pressed to find a place to live.
“It still leaves us short of the number of increases in rental completions that we need to see in order to meet the growing demand,” Ndoro said.
Halifax’s record-high rental prices are not solely caused by supply and demand or mortgage rates. Building costs have risen rapidly.
In 2023, construction costs for single-detached units in Halifax rose by over 10 per cent, marking the fastest increase among major Canadian cities. Escalating building and land costs, as well as labour shortages in the construction industry, are all factors driving rents.
“The wages for construction workers are going up, the cost of building is going up, so it’s slowing down the pace at which new housing can be built,” Ndoro said.
One place pressure is easing is interprovincial migration. A CMHC survey found that fewer people are moving to Nova Scotia from other provinces.
“People are moving to where there is more affordable housing,” Ndoro said. “we've seen an increase in the number of people who are choosing to move to other markets such as Alberta ... (which) slows down the demand a little bit with more units coming onto the market.”
However, Ndoro noted that in the short term, the rental market may not improve, leaving policymakers to find ways to do what they can to stimulate new housing construction.
“Developers (should) reassess their projects and explore innovative solutions to address the housing shortage, to meet the expected growing demand," Ndoro said.