Maritime Cities Face Real Estate Market Correction
HALIFAX – Maritime cities are experiencing some of the most significant real estate market corrections in Canada.
New data from the Teranet-National Bank House Price Index shows house prices dropping across the entire country. For the first time since the financial crisis of 2008, every city covered by the index has seen prices decline from their peak over the past 12 months.
This, writes National Bank economist Daren King, marks “the end of a prosperous period for the Canadian real estate market.”
Since its peak in May of 2020, the Teranet-National Bank index has fallen by almost nine percent, which King says is almost as much as during the last financial crisis.
And King believes the drop is not over.
As the Bank of Canada continues to raise its benchmark overnight interest rate, bringing up mortgage rates with it, King says property prices should keep going down “in the coming months.”
“All in all, we still anticipate a total correction of about 15 percent in house prices nationally by the end of 2023, assuming that the policy rate does not increase further and begins to decline in the second half of 2023,” he writes.
King says that while corrections are happening in markets across the country, the sharpest declines are coming in areas “that have experienced the most significant price growth over the past two years.”
Those areas, generally speaking, are in southern Ontario, parts of B.C., and the Maritimes, particularly Halifax and Moncton.
The index for Moncton was down 0.83 month-over-month in November, and down 6.54 since its peak in July of 2022.
Meanwhile, the latest data from the Nova Scotia Association of Realtors shows home prices dipped in Halifax last month but are still much higher than they were a year ago.
The NSAR says the average Halifax home sold for $491,978 in November, which was a 1.2 percent drop from October.
However, the year-to-date average home price in the city is still $545,155 (thanks to the surging market earlier this year), which is 17.3 percent higher than in November of 2021.
Other NSAR data further illustrates the market correction in the province.
Overall home sales in Nova Scotia dipped below long-term averages last month. In total, there were 831 sales in November, which was a nearly 30 percent decrease from the same month last year, 17 percent below the five-year average, and even two percent below the 10-year average.