The world’s economic landscape continues to witness a change like never before due to the COVID-19 pandemic. Canadian real estate is not spared, with both residential and commercial real estate feeling some impact.
This article focuses on how the coronavirus pandemic affects the Halifax real estate market.
What Will be the Effect of COVID-19 on Halifax Job Market?
The beautiful coastal city of Halifax attracts tourists, especially in the summer. As summer rapidly approaches, it is likely that preventive measures of COVID-19 like social distancing would still be in place up till at least mid-June, to ensure limited spread. This has direct implications on the tourist hubs like Halifax, as there are many businesses linked to the tourism and hospitality industry in this city, and these businesses are likely to keep experiencing a lag in provision of services for as long as this pandemic continues, and even for a few months after. While the government of Canada provides a huge relief to the people who are affected by the COVIDE-19 economical crisis by introducing supporting plans such as CMHC mortgage deferrals, no government incentives can replace regular job salary in the long term. This means that less people can afford the mortgage payments and consequently less people will buy and even some who can’t afford may sell their current properties.
In 2019, the Halifax Real Estate Market experienced new highs, with houses rising by 5.5% within a year in September 2019 and bringing the average price of a home in Halifax to $320,000. In fact, homes on the market have been selling above the asking price, with some being sold on their first day of the market.
However, the pandemic has had adverse effects on the commercial and residential real estate market in Halifax. The economic impact of COVID-19 has left many people unable to afford to purchase houses, as a result of either losing their jobs or suffering a pay cut. Together, these factors might lead to the cooling of the rather hot real estate market in Halifax.
Impact of COVID-19 on Immigrant Purchase of Real Estate in Halifax
In 2019, Nova Scotia welcomed over 7,500 new permanent residents, the fastest growth the province has experienced over a 12-month period within the last 40 years. Although Halifax cannot be considered a top destination for immigrants when compared to larger cities like Vancouver and Toronto, there has been a rise in the number of families immigrating into Halifax yearly.
This pandemic has led to the closure of most countries’ borders- including Canada’s, and this would delay immigrant entry into Canadian cities. The impact of this on the residential real estate market in Canada would be a significantly lower purchase of houses by immigrants.
Regardless, it is not expected that there’d be a significant drop in residential real estate purchase as measures such as lowered overnight lending rates of the Bank of Canada, has been put in place to combat the economic implications of this crisis. Soon enough, this will translate into lower mortgage rates in Canada, thus lowering the overall cost of home purchase in Canada. Additionally, because of the looming recession, there is reduced interest in investing in volatile asset classes like equities and this makes residential real estate more attractive to investors who are looking for safe investment options. The relative affordability of real estate in Halifax when compared to other Canadian cities further increases its attractiveness to many buyers.
The COVID-19 pandemic is likely to result in reduced influx of tourists and lowered overall spending power of residents in Halifax. While the impact on commercial real estate will be felt deeply since this market is largely connected to tourism, the residential real estate market will remain relatively safe due to lower mortgage rates, and the favorability of less volatile investments -such as real estate- in a period of recession.