Population growth, lack of affordable housing locks first-time homebuyers in rental market: report

A new survey says Canadian renters who hope to become home owners face serious challenges.

A new report by RE/MAX Canada reveals a number of obstacles young people face when trying to purchase their first home.

The Nation of Renters Report shows price appreciation, rapid population growth and a limited supply of affordable housing have propelled the rental markets in six major Canadian cities, including the Halifax Regional Municipality (HRM), in recent years.

Affordability

“Affordability remains, by far, the greatest barrier to home ownership from coast to coast. With the average price of a home in most Canadian markets more than doubling between 2006 and 2021, first-time buyers are falling through the cracks,” says Christopher Alexander, president of RE/MAX Canada.

“Rental rates that remain above historic levels, the high cost of living, and wages that have not kept pace with price growth pose a serious challenge to buyers hoping to amass a down payment. It’s near impossible for some buyers, even with steady, well-paying jobs.”

StatCan census data shows the average price of a home in HRM in 2006 was $202,094. It’s a staggering difference in 2021, when StatCan says the average price jumped to $460,149 – a 127 per cent increase in 15 years.

Down payment dilemma

First-time homebuyers in HRM have been most impacted by higher housing values and stringent lending policies, according to RE/MAX Canada’s report.

While many entry-level buyers can afford monthly mortgage payments, the down payment remains the largest roadblock to home ownership – with the average price of a home in Halifax currently sitting at $575,000.

Population growth

Home ownership levels in HRM have steadily declined between 2006 and 2021 – dropping from 64 per cent to 58.6 per cent, according to StatCan census data. The increase in interprovincial migration and immigration during the pandemic may have reversed the course of home ownership in the city.

According to Statistics Canada, nearly 57,000 new residents called Halifax home between July 2020 and July 2024, bringing the city’s population to 530,000.

RE/MAX Canada says, while growth can be positive, it can also come with its challenges.

“Affordability has been an ongoing issue in the city, culminating with a 60-per-cent increase in housing values between 2016 and 2021, bringing average price to $460,149,” reads the report.

“Strong interprovincial migration and immigration have further bolstered price appreciation during the pandemic, but home-buying activity was curtailed when the Bank of Canada started to hike interest rates.”

Focus on multi-unit rental accommodations

The report shows many developers continue to focus on multi-unit rental accommodations rather than condominiums given the price difference between semi-detached or row housing and condo units. This is due to higher input costs from construction materials to labour costs – all of which are passed down to the consumer.

In the report, the real estate company says now is the time for the municipality to revisit development costs on new construction, reduce red tape and fast-track approvals.

Halifax has historically been slow to turn around permit approvals in comparison to other municipalities, says the report.

The Halifax Partnership Dashboard shows housing starts (on a 12-month moving average) fell to 311 in December 2024, down 149 units from year-ago levels.

“Continued changes to the land use bylaws should focus on increasing density and allowances should be extended to first-time homebuyers in terms of in-law suites and rental unit,” says Ryan Hartlen, RE/MAX Nova.

“Some builders are already including secondary suites in detached homes to allow buyers to offset mortgage costs. Additional costs at a municipal level, including a 1.5 per cent transfer tax are an impediment to home ownership for first-time buyers. Some housing and policy analysts have suggested a municipal or provincial deferral or exemption under a certain price point would help younger buyers enter the housing market.”

Home ownership rate

RE/MAX Canada says the home ownership rate in Halifax remains seven per cent below the national average.

A report by the Nova Scotia government notes that affordability, income constraints, and challenges in saving a down payment are key factors that have impeded growth in home ownership to date. High provincial tax rates have also been a contributing factor.

Allowing buyers to enter the market

In 2006, under the direction of the Department of Finance, the Canada Mortgage and Housing Corporation (CMHC) relaxed mortgage rules for homebuyers by:

- raising insured amortization periods from 25 to 40 years over a 10-month period

- introducing zero down payment mortgages and interest-only mortgages (for the first 10 years of the mortgage)

In response to the changes, the housing market in Canada soared, reporting its best year on record in 2007.

By July 2008, the amortization period was shortened from 40 to 35 years and the requirement for a five per cent minimum down payment was established.

“While the Great Recession shook housing to its core in the United States, the Canadian housing market weathered the storm in spite of less-stringent mortgage rules,” says Alexander.

“Delinquency rates for mortgages rose to seven per cent in 2009 in the U.S., while mortgage arrears in Canada hovered at just 0.42 per cent. In seeking to shore up potential risks to the housing and financial sectors to avoid a U.S.-style fallout, we saw an over-tightening of the qualification process that persists well beyond the conditions that prompted it.”

In 2012, home-ownership incentives started rolling back and established the stress test in 2018.

“It’s time to revisit the potential to relax policy to allow buyers to enter the market and build equity,” says Alexander.

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