Amid a boom that saw Nova Scotia’s population grow five per cent in the last five years, the rental vacancy rate in the province’s capital city has dropped to one per cent.
In its latest rental market report released Friday, the Canada Mortgage and Housing Corporation said Halifax’s vacancy rate declined to 1.0 per cent from 1.9 in October 2021.
“Rental market conditions tightened in 2021, with increased demand for apartments outpacing supply,” said Chris James, a senior economics analyst with CMHC, in the report.
The average rent for a two-bedroom in Halifax rose by 4.8 per cent to $1,335, with the highest prices in the mainland of the city south of St. Margaret’s Bay Road, and the highest rent paid in the southern portion of the peninsula.
The report said the influx of people moving to Nova Scotia from other provinces has increased competition for renters as the city failed to add enough units to increase demand.
“Canadians fleeing COVID-19 restrictions, crowded cities and high house prices in the Halifax region resulted in record interprovincial migration trends in 2021,” the report said.
“Lower vacancy rates and higher rents likely challenged lower-income households, young adults, fixed-income seniors and new immigrants searching for affordable rental apartments.”
The report said economic recovery from COVID-19 also strengthened rental demand in Halifax.
“Early stages of recovery only benefitted those industries where workers could work remotely from home,” it said. “However, as things reopened and normalized, labor market conditions improved, contributing to recent robust rental market activity.”
Halifax’s vacancy rate is among the lowest in the country, with Victoria, B.C., and Peterborough, Ont., also reporting a vacancy rate of one per cent. Across Canada, the average vacancy rate in Canadian centres with a population of 10,000 or more is 3.1 per cent.
Homeownership ‘increasingly difficult’ for renters
The report also said year-over-year house sales were up by about 25 per cent, “showing overheating relative to new listings,” and average house prices were up by around 30 per cent, “indicating overvaluation compared to price fundamentals.”
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The level of housing market vulnerability remained high in Halifax, the CMHC said.
“The erosion of affordability would have made homeownership increasingly difficult for renter households in 2021,” it said. “We’ll continue to monitor labour market activity and its impact on the market going forward.”
The report also noted that retirees and seniors “capitalized on high house prices in more expensive markets such as Vancouver and Toronto to move to the Halifax region.”
“To age comfortably, this trend is likely to take advantage of larger geographies and open spaces, as well as less densely populated areas, less traffic congestion and more affordable housing ownership and rental options,” it said.
Migration trends increased demand for “larger, higher priced rental apartments,” especially in new buildings. The CMHC said vacancy rates for the most expensive units priced above $1,150 saw the biggest decline in all rent ranges.
“Rents for two-bedroom and larger apartments in newer buildings are only affordable for renters with higher incomes and savings, such as working professionals and retirees,” it said.
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