N.S. home sales fell 31% in April compared to last year
High interest rates to blame, expert says
New statistics from the Canadian Real Estate Association show that home sales in Nova Scotia fell 31 per cent in April compared to the same month last year, while the average price dropped 4.6 per cent to $441,625.
The reason sales have fallen is that mortgage rates have risen to the highest level since 2008, which continues to affect affordability, said Bidyut Talukdar, an associate professor of economics at Saint Mary's University in Halifax.
Talukdar said this has made borrowing money more expensive for both homebuyers and companies that build homes.
"It's only [a] very low percentage of [the population that] can afford a house, buying a house and maintaining a house."
Across Canada, it takes an average of 48.8 per cent of a household's disposable income to cover mortgage payments and utility costs, according to the Bank of Canada's latest housing affordability index data from the last three months of 2022. That's one of the highest rates since 1990.
The housing crisis is another reason home sales have fallen, said Matthew Dauphinee, president of the Nova Scotia Association of Realtors. That's because there are fewer options for people changing homes.
"In order for people to sell their homes, they do need somewhere to go, whether it be an apartment, condo, [or maybe a] move to another region," Dauphinee said.
He said it is currently a seller's market in the province, although the market is more "balanced' compared to the last few years.
"There's still a lot of people in need of homes, looking for homes," Dauphinee said, "and at certain price points we're still seeing a lot of activity like multiple offers."
Talukdar said he expects home prices to continue falling over the next five to seven months. However, he said Nova Scotians can't expect to see prices at pre-pandemic levels again.
He also doesn't expect the Bank of Canada to lower interest rates until late this year or early 2024, which may boost demand for rental units.
"People can't afford [to buy] a house, so they need to rent," Talukdar said.
In Halifax, 76 per cent of housing construction starts from January to April this year have been for the rental market, according to the latest CMHC data.
Talukdar said builders are "spending their resources for rental units because that's the place where there's more return."
Dauphinee said he has also seen a shift in the kinds of properties that his clients are looking for due to uncertainties in the pricing of building materials, labour and gas.
"Properties that are turnkey, ready to just live in and enjoy without having to put any work into … [have been elevated] to the top, where people are willing to pay more for that certainty," he said.