Rent prices in Halifax are rising at rates above the national average, further deteriorating affordability for low-income households, according to a new report from the Canada Mortgage and Housing Corporation.
CMHC’s latest rental market report released Wednesday said the average rent growth for same-sample units – apartments common to two consecutive surveys – rose by 11.9 per cent last year, “the highest single-year increase and four times the average historical growth rate.”
The rent growth in Halifax was among the highest of the 18 markets surveyed by the CMHC, and was only surpassed by Calgary, where average rents rose by 14.3 per cent, and Hamilton, Ont., which saw a 13.7 per cent increase. The national average rent growth was eight per cent.
The average cost of a two-bedroom apartment in Halifax was $1,628 per month in 2023, up from $1,445 in 2022. The national average rent for the markets in CMHC’s survey was $1,359.
Halifax’s low one-per-cent vacancy rate remained unchanged from 2022, “despite a record number of rental completions made in response to increased demand.”
Last year marked the third straight year where Halifax’s vacancy rate has been one per cent. The rate has been below two per cent since 2017.
Higher prices for new tenants
The report also said turnover rates for apartments dropped to its lowest level in the last six years – “showing tenants’ reduced tendency to move.”
That’s likely because of the “significant difference” between the rent paid by new tenants versus rent paid by existing tenants. There is currently a five-per-cent rent cap in Nova Scotia, but the cap does not apply to new tenants.
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“Beyond usual market dynamics and renovations, landlords have faced extraordinary increases in operating expenses, and have passed them on to new tenants through higher rents,” the report said.
The average rent for turnover units – those turned over to a new tenant – was $1,705 per month. For units that continued to be rented by existing tenants, the average rent was $1,590.
“The prospect of higher rents at turnover has likely discouraged tenant mobility within the Halifax (census metropolitan area) rental market,” it said.
“Existing tenants encounter challenges when they must relocate due to lifestyle changes. This could lead to long-term housing inefficiencies.”
Demand outpacing supply
There were 2,842 new units added to the market in 2023, but that wasn’t enough to address the province’s steep rise in population.
“Record numbers of people called the Halifax (census metropolitan area) home in 2023,” the report said. “The region receives the majority of migrants to Nova Scotia.”
In the 12 months ending June 30, 2023, net migration increased “at a record pace,” reaching 33,249 people – up from 28,109 for the previous period.
“This translated into Nova Scotia’s population increasing by a record high 3.2 per cent,” the report said.
“Non-permanent residents and immigrants were the biggest contributors to this growth. Many immigrants and international students are typically renters.”
The report also noted that many renters are unable to transition to homeownership, putting further strain on the rental market.
“This is because finding affordable options on the housing market remained challenging or even impossible due to historically high house prices and mortgage rates,” it said.
More supply is ‘crucial’
Finding an affordable place to live is especially challenging for low-income households.
Housing is typically considered to be affordable when it costs 30 per cent of less of someone’s income. For households earning less than $30,000 per year, only 2.4 per cent of rental units fit within that threshold.
The report said recent government initiatives, like rebating the HST on new rental construction projects and making more investments in affordable housing, could help reduce the supply deficit.
But one of the biggest challenges in closing this gap is labour shortages within the construction industry, which currently holds a vacancy rate of nearly eight per cent, “well above most other industries.”
“More rental supply is crucial to address persistent low vacancy rates and rising rents,” it said.
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