Halifax rent prices to keep rising as more people can’t afford homes, report suggests – Halifax | 24CA News

Rent costs in Halifax are anticipated to proceed rising over the subsequent couple of years, based on a brand new report from the Canada Mortgage and Housing Corp.

This comes at a time when specialists say increasingly more persons are being priced out of the housing market.

Kevin Ndoro, a senior economics analyst for the CMHC, stated it’s “very important” that Halifax will increase its housing provide.

“More and more people are not able to go transition from rental into home ownership, so that’s putting a lot of pressure on the rental market,” he stated, including that Halifax’s emptiness fee is “among the lowest in the country” at one per cent.

In its newest housing market outlook, the CMHC stated rental demand is robust, “owing to the sharp population increase in 2022 and the vacancy rate being at a record low.”

Rental housing is predicted to stay in excessive demand, it stated, “partly due to net immigration flows and households delaying the transition to homeownership.”

The report stated Halifax’s emptiness fee is predicted to extend this yr, earlier than falling once more in 2024 and 2025.

“Rents are expected to rise further over the forecast horizon, as vacancy rates are still low and operating costs for property managers continue to increase,” the report stated.

It famous that whereas lease cap laws remains to be in place till the top of 2023, rents can nonetheless enhance for brand spanking new leases.

“Property managers might also charge the maximum rent possible for newly built units in case further rent increases are limited by an extension of the rent cap legislation,” it stated.

Home costs

The report stated dwelling costs have been falling since they peaked in April 2022, however are anticipated to stabilize and stay barely above 2023 ranges.

Housing begins are anticipated to lower this yr, “largely due to a decline in single-detached home construction.”

It stated the stock of accomplished and unsold single-family houses is trending upward, as increased rates of interest are lowering consumers’ borrowing skill and resulting in much less demand.

But regardless of this, the CMHC stated the stock of houses on the market remains to be “critically low, keeping upward pressure on prices while demand stays strong.”

“More affordable homes are still selling above asking prices. Nova Scotia households have a lower debt burden compared to most provinces. This reduced sensitivity to interest rate hikes makes them likely to hold out for the asking price when selling,” it stated.

It stated dwelling gross sales are anticipated to drop once more this yr consistent with elevated mortgage prices, however a rebound of gross sales is predicted in 2024 and 2025 as financial situations enhance.

“While most of the major centres in Canada can expect to see a very big drop in prices, we don’t expect to see that in Halifax,” Ndoro stated.

That’s as a result of “we still have a relatively affordable market” in contrast with locations like Toronto and Vancouver, “so that demand from people from those provinces — we can expect to see that in Halifax and keep prices up.”

Supply-and-demand not working

Jill Grant, a Dalhousie University professor emeritus of planning, stated housing provide continues to be tight, with a small variety of improvement and constructing corporations controlling an honest portion of developable land within the space.

“I think the low supply of housing on the market here is very evident,” she stated. “There’s hardly anything that comes up and when it does, prices are still fairly high.”

There’s some good news on the provision entrance — the CMHC says there have been 1,700 new rental models accomplished within the company’s 2023 reporting interval, however the variety of models below building is 6,000.

But that received’t essentially result in decrease costs. While the report variety of new models below building is predicted to ease rental market stress, rental costs are anticipated to go up over the subsequent two years, with the common two-bedroom house anticipated to value $1,780 in 2025, up from a median of $1,558 in 2023.

Grant stated the “supply-and-demand” mannequin of housing hasn’t been working because the province ended its personal land improvement program within the Nineteen Nineties.

“When the province was developing land, it was doing so in part with funds provided by CMHC to buy land and to finance development,” she stated, including that there was collaboration required from all ranges of presidency to attain social housing.

“There’s a real problem in terms of supply not being able to keep up with demand. This idea that somehow the market maintains a perfect balance is clearly not true,” she stated. “Although demand is strong, prices are strong, industry is not keeping up with demand.”

While there have been “lots of approvals” given by planning departments in Halifax and throughout the nation, Grant stated there nonetheless isn’t sufficient housing being constructed.

Labour is one key subject within the building sector, she stated.

“But a lot of it has to do with monopoly in the industry,” Grant says. “The industry is set up in a way that it’s never going to oversupply housing; it’s too valuable of a commodity and gets produced at a slow rate.”

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