How is the Atlantic Canada real estate market performing in the era of rate normalization? Eastern Canada has been a hotbed of growth for the last two years, from population gains to economic resuscitation. With the coronavirus pandemic turning the housing industry upside down and triggering a change in consumer patterns, the Maritimes region is enjoying a renaissance. But while there is the uncertainty of higher interest rates and a post-crisis national economy reopening, experts are confident that this part of the country will survive the next phase of the economic cycle.
In the meantime, market analysts are combing through the data to determine just how well places like Prince Edward Island and Nova Scotia are doing in this environment. Experts contend that other provinces might be experiencing a slowdown, but Atlantic Canada is still heating up.
Atlantic Canada Real Estate Activity Continues to Heat Up
Here is a look at the latest housing data in the eastern provinces:
Nova Scotia
The number of residential properties sold in May declined 3.9 per cent year-over-year in June, totaling 1,419 units, according to the Nova Scotia Association of REALTORS. Home sales were still 1.6 per cent above the five-year average and 13.5 per cent above the ten-year average for this time of year, despite the decline. On a year-to-date basis, home sales declined 18.1 per cent compared to the same period a year ago.
Prices increased considerably in June, with the MLS® Home Price Index (HPI) surging close to 27.2 per cent to $417,300. All three property types posted notable gains:
- Single-Family Homes: +27 per cent to $410,900
- Townhome: +25.3 per cent to $490,300
- Apartments: +31.4 per cent to $479,800
Overall, the average price of homes sold in Nova Scotia skyrocketed by about 15 per cent year-over-year.
Newfoundland and Labrador
In June 2022, sales in the Newfoundland and Labrador real estate market fell 7.4 per cent year-over-year. Despite the decline, this the second-highest number of sales for the month of June. In total, there were 649 units sold. The first six months of 2022 witnessed home sales advancing nearly modestly by 3.2 per cent. Historically, home sales were more than 32.9 per cent above the five-year average and 43.6 per cent above the decade average for this time of the year.
Home prices were notably up in June, according to the Newfoundland and Labrador Association of REALTORS®. The composite benchmark price rose 10.8 per cent to $281,300. Single-family homes dominated price growth, but other residential properties also enjoyed modest gains:
- Single-Family Homes: +10.9 per cent to $283,200
- Townhomes: +6.6 per cent to $276,700
- Apartments: +9.2 per cent to $216,600
New Brunswick
New Brunswick Real Estate Association data show that the provincial housing market recorded a 3.7-per-cent decline in the number of homes sold in June, with 1,270 units exchanging hands. Home sales in New Brunswick were 10.7 per cent above the five-year average and a little more than 28.5 per cent above the decade average for the month of June.
The New Brunswick real estate market is slowing down compared to last year. In the first six months of 2022, home sales dropped 12.8 per cent year-over-year, totaling 5,839 units.
Price growth has ballooned on an annualized basis, with the composite benchmark price climbing approximately 30 per cent to $299,000 in June. Association data show that all major property types enjoyed significant gains:
- Single-Family: +29.6 per cent to $299,900
- Townhomes: +37.1 per cent to $262,300
- Apartments: +27.4 per cent to $272,900
On average, the price of homes sold in June advanced 27.4 per cent to $295,082.
Prince Edward Island
The Prince Edward Island real estate market has fallen substantially from its record peak in April 2021. According to the Prince Edward Island Real Estate Association, home sales fell 12.9 per cent year-over-year, totaling 202 units. Year-to-date, residential property sales dropped 10.5 per cent compared to the same period a year ago.
Historically, home sales were 3.3 per cent below the five-year average and 0.8 per cent above the 10-year average for the month of June.
The average price of homes sold in the PEI real estate market in June surged by 25.1 per cent year-over-year, to $415,985. The more-comprehensive year-to-date average price was $394,778 – an increase of 19.5 per cent compared to the first six months of 2021.
Will Atlantic Canada Survive High Interest Rates?
Although there has been some moderation in the Atlantic Canada real estate market this year, activity remains robust on both the east coast and the Prairies.
The reason? Supply continues to be a chief challenge, says RBC Economics in a recent research note.
“With supply still low, this maintains intense upward pressure on prices in these regions. The MLS HPI continued to soar in April in Halifax-Dartmouth (up 5.6% m/m), Saint John (up 3.2%), Fredericton (up 2.7%) and Moncton (up 2.4%),” the bank’s research arm noted.
That said since Atlantic Canada is still far more affordable than much of the nation, it is less sensitive to increasing interest rates, RBC added.
“The resilience in Atlantic Canada and the Prairies can be largely explained by their relative affordability,” RBC wrote. “Lower-priced markets are less sensitive to rising rates. This advantage will continue to support demand and prices in those regions though it won’t entirely offset the impact of the Bank of Canada raising its policy rate to 2.5% by the fall as we expect.”
The next several months will be a telling time for this region of the country, but the future’s bright for the nation’s eastern seaboard.
Courtesy: remax.ca
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