Interest rates are one of the most influential economic tools in shaping the housing market. In Halifax, Nova Scotia, this impact has been particularly noticeable in recent years as the region experiences growth, increased migration, and evolving buyer behavior. As interest rates rise or fall, they directly affect affordability, borrowing power, and the overall supply-and-demand dynamics of the local market.
What Are Interest Rates and Why Do They Matter?
Interest rates, set by the Bank of Canada, represent the cost of borrowing money. When interest rates are low, borrowing becomes cheaper, allowing more people to qualify for mortgages and afford higher-priced homes. Conversely, higher interest rates mean larger monthly payments for borrowers, which tends to reduce home buying activity.
These rates also affect existing homeowners who have variable-rate mortgages, as they might face increased monthly payments when rates go up. In this way, interest rates don’t just impact buying power, they influence long-term housing affordability and economic decision-making across the region.
Recent Trends in the Halifax Housing Market
The Halifax housing market has seen a mix of cooling and recovery as interest rates have fluctuated over the last two years. According to WOWA.ca, the average home price in Halifax in February 2025 reached $590,786, a 5.2% increase year-over-year. This growth indicates resilience in the market despite higher borrowing costs.
Sales activity also showed a modest rebound. There were 339 residential transactions in February 2025, up 1.5% from the previous year, suggesting that some buyers are adapting to the new interest rate environment.
Although interest rates lowered, bidding wars continue because the demand in Halifax remains strong due to population growth, interprovincial migration, and limited inventory.
How Low Interest Rates Fueled Halifax’s Housing Boom
Low interest rates during the pandemic era created ideal conditions for a housing surge in Halifax. With record-low borrowing costs, more people entered the market, including first-time buyers, investors, and out-of-province purchasers. This demand, combined with supply shortages, drove up home prices quickly.
Homeowners who bought at low rates often locked in 5-year fixed mortgages, shielding themselves from recent increases. However, those who chose variable-rate loans or who are shopping today are facing a very different financial environment.
The Pressure of Rising Rates
As the Bank of Canada began hiking rates in 2022 and 2023 to combat inflation, the housing market started to shift. Higher interest rates increase mortgage costs significantly. For example, a 1% increase in mortgage rates can reduce a buyer’s purchasing power by roughly 10%.
This has priced some buyers out of the market or forced them to adjust their expectations and seek smaller or more affordable homes. Sellers, on the other hand, may need to be more competitive with their pricing strategies, particularly if they’re hoping to attract first-time buyers.
What It Means for Buyers and Sellers
For buyers, higher interest rates mean reassessing affordability. Budget-conscious buyers may consider extending amortization periods or seeking homes outside city centers to keep costs manageable. Getting pre-approved for a mortgage is more critical than ever, as it helps define a realistic price range and protects against future rate hikes if locked in early.
For sellers, the days of multiple offers over asking may be slowing, especially for mid-tier properties. However, Halifax remains in demand compared to many other cities in Canada, particularly for remote workers and retirees, so well-priced and well-presented homes are still moving.
Broader Economic Factors at Play
It’s important to recognize that interest rates don’t operate in a vacuum. Other economic forces, including inflation, wage growth, employment trends, and global market uncertainty also play a role.
The Canadian economy, while showing signs of resilience, is still reacting to the lingering effects of the pandemic, energy prices, and geopolitical issues. These pressures influence the Bank of Canada’s rate decisions and, by extension, mortgage rates.
Moreover, Halifax has been one of Canada’s fastest-growing cities, with strong immigration and lifestyle appeal. Even with rate hikes, its market fundamentals remain robust. Limited inventory continues to support pricing, especially in desirable neighborhoods near the downtown core, waterfront, and growing suburban communities.
Future Outlook: Stabilization Ahead?
So what’s next for Halifax real estate? Experts believe the worst of the rate hikes may be behind us. Some are even predicting rate cuts in the second half of 2025 if inflation remains under control.
RBC notes that “modest gains in sales and prices are likely to be sustained in the near term,” provided there are no shocks to the economy. This suggests a period of stabilization, where buyers and sellers can make more informed, less reactive decisions.
Additionally, increased new construction projects are expected to help meet long-term demand. As more inventory becomes available, price pressures may ease, providing more balance in the market.
Interest rates will always be a critical driver in Halifax’s housing market. Whether you’re a first-time buyer, investor, or seller, staying informed about rate trends, mortgage options, and broader economic conditions is essential. Halifax’s market remains one of the more affordable and attractive in Canada, but that doesn’t mean it’s immune to interest rate pressures. Smart planning and professional advice can make all the difference in navigating this evolving landscape.
If you’re looking to buy or sell a home in Halifax, check out HalifaxAreaHomesForSale.com for a wide range of listings, local insights, and expert support.
Alisha Caillie-Fleet- Realty in Halifax, Nova Scotia
alishasellshfx@gmail.com 902-489-4911
1959 Upper Water St, Halifax, NS B3J 3N2, Purdy’s Wharf Tower 1
