If you live in Nova Scotia, you may have noticed that the rate of job creation in the province has slowed during the past decade. Not only has this trend directly affected the job market, but it has also reduced activity in the resale market and in new housing construction. These effects on the housing market aren’t due to reduced supply, but instead are caused by a lack of demand.
The HRM population is aging. The number of 60+ year old residents is increasing rapidly in Nova Scotia and throughout the Atlantic provinces. Because of the aging population, fewer residents are buying single-dwelling homes, which is accelerating an already generally weakened regional housing market.
Additionally, in Atlantic Canada, only 35% of homebuyers are identified as first-time buyers (the majority of whom are aged 34 and under; see stats below from CAAMP), which is 10 percentage points below the national average. Out-migration of young people to other parts of the country is one major cause of this low percentage.
Based on the NSAR MLS® and Turner Drake in-house data, the most commonly purchased home in HRM is single-detached (more than 3,900 each year). More than half (64%) of those purchasing this type of home are typically second-time buyers. On the lower side of the market, there are approximately 878 purchases of semi-detached and row homes in HRM each year, about two-thirds of which are typically bought by first-time buyers.
According to statistics from the Canadian Association of Accredited Mortgage Professionals (CAAMP), most first-time and second-time Canadian homebuyers are aged 25-34. Subsequent buying is most often among those aged 50-59. Less than 2% of home purchases are made by those who are 70 years or older. Why does this matter? The bottom line is that as the population ages, more people are less likely to purchase first-time, second-time, or even subsequent homes.
As the majority of single-detached first-time buyers (aged 34 and under) and subsequent buyers (aged 50-59) reaches peak levels, expect the single-detached demand to level off, and then start to decline. The HRM population reached its peak levels of these age groups in last year. Therefore, housing market sales will continue to decline slowly throughout 2016 and in the next few years.
Click here to read more, including tables outlining the statistics discussed above. This topic was covered in detail in this month’s TDP Trends, a free service provided to decision makers with property portfolios in Atlantic Canada. Each month, it provides information on demographic, psychographic, migratory, income and wealth distribution, investment, technological, space utilisation, and other trends influencing property values now or in the future. TDP Trends are archived on the public area of our website.