Halifax's rental market remains robust heading into 2025, underpinned by strong population growth and economic momentum. The city's population surged to 492,200 in 2023, a record annual increase of over 19,000 people (about +4%), driven largely by international immigration. This rapid growth – Halifax even surpassed the 500,000 mark in 2024 – has created heightened demand for housing at all levels. Robust job creation in sectors like tech, finance, and government has kept unemployment low (~5%), attracting young professionals and families to the city. Such demographic and employment trends point to sustained demand for rentals, particularly in more affordable, family-suitable units that "bridge the gap" between single-family homes and high-rise apartments.
In 2023, Halifax faced an estimated 20,000-unit housing shortfall, a gap it cannot close with large developers alone.
Urban planning developments are also influencing market trends. Halifax's leaders have zeroed in on the "missing middle" – duplexes, triplexes, townhouses and small-scale multi-unit buildings – as a solution to housing shortages. In response, Halifax passed sweeping planning amendments in mid-2024 to spur gentle density. These new rules, supported by the federal Housing Accelerator Fund, now allow up to four units on virtually any residential lot in serviced urban areas, and as many as 6–8 units on larger lots in central, walkable neighborhoods.
By enabling smaller developers and individual property owners to create rentals, Halifax aims to dramatically boost supply – the zoning changes add capacity for ~71,000 new units over time in the Regional Centre alone. This pro-density stance, combined with ongoing transit improvements and a younger population, is expected to keep demand strong for small multi-unit rentals well into 2025, as more residents seek urban living options that are neither high-rise nor suburban sprawl.
Halifax's tight rental market has translated into low vacancies and rising rents, although new supply is moderating the pace of growth. The overall apartment vacancy rate in the Halifax region was just 1.0% in 2023 – an all-time low sustained since 2021. By late 2024, vacancy edged up to 2.1% – the first increase in years – as a wave of new rentals came online and population growth eased slightly. Even at 2.1%, vacancy remains below the 10-year average (2.7%), indicating a continued landlord's market. Notably, lower-priced units are still incredibly scarce: apartments renting under $1,300/month saw vacancies well below 1%. This suggests demand remains fiercest in the mid-market segment – exactly where many "missing middle" rentals sit.
Rents have climbed steeply over the past few years. The average rent across all unit sizes reached $1,538 by 2023, up roughly 60% from a decade prior. In 2024, rent growth slowed markedly – the average 2-bedroom rent rose about 3.8% to $1,707 (vs. an 8–11% jump the year before).
This cooldown reflects renters hitting affordability limits and competition from new units. Still, any positive rent growth atop already high rates keeps rental yields attractive. Many small multi-unit properties in Halifax can generate solid rental income relative to purchase price.
Reported cap rates for multi-unit residential assets in Atlantic Canada generally range from the mid-4% to 5% level. For example, suburban apartment buildings in Canada showed cap rates around 4.6% in late 2024, and Halifax's multi-family yields remain in this low-5% range for desirable properties. Such cap rates, while historically low, often outpace local mortgage rates after the Bank of Canada's recent rate hikes. (As of early 2025, lending rates are in the 5–6% range, meaning investors must carefully manage financing to maintain cash flow.)
One advantage for small investors is the potential to add value and boost returns on "missing middle" properties. With vacancy so low, even aging duplexes and triplexes stay full, and turnovers present big rent uplift opportunities. In Halifax's rent-controlled environment, existing tenants tend to stay put – the tenant turnover rate hit a 7-year low in 2024. When a unit does turn over, however, landlords can reset to market rent. In fact, rents on units that turned over jumped ~28% on average in 2024 – the highest increase in Canada. This gap between in-place and market rents means investors who renovate units or re-lease vacated apartments can achieve significant rent growth (and higher yield) quickly, while the low vacancy ensures minimal downtime. Overall, rental yields for small multi-units are healthy and forecast to remain stable in 2025, as continued demand supports high occupancy and modest rent increases of ~3–5%.
Government intervention in Nova Scotia and Halifax is playing a key role in the rental landscape – both in encouraging new small-scale development and in regulating returns.
As mentioned, Halifax Regional Council enacted new zoning policies in 2024 explicitly to enable more small-scale multi-unit housing. These changes, part of the response to the federal Housing Accelerator Fund, legalize up to 4 units "as of right" on residential lots (eliminating lengthy rezoning processes) and even up to 8 units in transit-accessible urban neighborhoods. The intent is to streamline approvals and empower individual homeowners and small builders to create secondary suites, backyard units, duplexes and small apartment buildings.
The city estimates these pro-density rules will substantially increase housing construction by the private sector. For investors, this means more opportunity to develop or expand small rental properties – for example, by adding units to an under-utilized lot or converting a large single-family home into a fourplex – without the red tape that previously made such projects difficult.
Nova Scotia currently has an annual rent increase cap of 5% in place for existing tenants, a policy first introduced as a temporary measure during the pandemic. In March 2023, the provincial government extended this rent cap through December 2025, and as of late 2024 it is set to be further extended to 2027 at the same 5% limit.
The cap only applies to continuing tenants – once a unit is vacated, it can be leased at market rent. This policy aims to protect renters from sharp increases, but it also means investors must plan for limited rent growth (max 5%/year) on occupied units. The upside is Halifax's rental turnover is low, so many tenants accept the 5% raises and stay, providing stable long-term tenancy.
However, landlords considering major renovations or repositioning of small multi-unit properties need to follow provincial rules on "renovictions" and tenant notice to avoid contravening the Residential Tenancies Act. Rent control in Nova Scotia is relatively moderate (5% is a higher cap than some provinces), but its ongoing extension does add an element of regulatory risk for investors if it continues indefinitely.
A recent major incentive is the removal of sales tax on new rental construction. In late 2023, the federal government eliminated the 5% GST on qualifying purpose-built rental developments to spur housing supply. Nova Scotia quickly followed suit, announcing it would drop the 10% provincial portion of HST on new apartment projects as well. This effectively provides a 15% cost reduction on building new long-term rental properties – a huge boost to project viability.
Small developers planning to build a triplex, rowhouse, or apartment (for rental use) in 2025 can benefit from these tax savings, improving their construction budget and returns. Additionally, Nova Scotia continues to exempt non-resident owners from the provincial property tax surcharge if they rent out their unit to local residents year-round. (The province had introduced a tax on non-resident property owners, but waives it for those providing long-term rentals, recognizing they are adding to housing supply.)
Out-of-province investors should note, however, that Nova Scotia doubled its deed transfer tax for non-resident buyers – from 5% to 10% in 2025 – which can significantly increase upfront costs when acquiring property. Overall, the policy environment is a mix of carrots and sticks: incentives for creating rentals (tax breaks, looser zoning) balanced by protections for tenants (rent caps).
Certain areas of Halifax offer particularly strong prospects for "missing middle" rental investments, thanks to high rental demand, growth potential, and favorable pricing. Here are a few neighborhood hotspots to watch in 2025:
The urban core of Halifax – especially the North End and West End – is in heavy demand among young professionals and students. Vacancy rates on the Peninsula have been effectively near 0% in recent years. Neighborhoods like Hydrostone, Quinpool, and Agricola/Gottingen area blend older homes (ripe for duplex/triplex conversions) with new amenities.
The new planning rules allowing 4-8 units in these walkable districts make the Peninsula a prime target for small-scale infill projects. Rents are on the higher side here (the Peninsula commands some of the highest average rents in Halifax, often $1,600+ for a 1-bedroom), but investor demand is strong because appreciation and rent growth prospects are excellent. Proximity to downtown jobs, universities (Dalhousie, SMU), and transit means landlords can count on a deep tenant pool year-round.
On the other side of the harbor, Dartmouth has emerged as a rental market to watch. Downtown Dartmouth (near the ferry terminal) has seen a renaissance with new cafes, breweries, and condo projects drawing young renters priced out of Halifax.
Meanwhile, Dartmouth North offers more affordable properties with high rental need – it had the lowest average rents in the region (~$1,246) but extremely tight vacancy in 2023. Small multi-unit buildings in areas like Brightwood, Albro Lake, and around Dartmouth General Hospital can be acquired at lower prices than equivalent buildings in Halifax, yet demand from working-class families and newcomers is very strong.
Dartmouth's rental growth has been notable (e.g. the Dartmouth/Woodside area saw one of the highest home price jumps in 2023, +5.4%, indicating rising desirability). Good transit links (ferry, bridges, buses) and ongoing commercial development make Dartmouth a smart bet for investors seeking value and upside.
Dartmouth North offers more affordable properties with high rental need – it had the lowest average rents in the region (~$1,246) but extremely tight vacancy in 2023.
Just west of the peninsula, the Mainland North region (around Clayton Park, Fairview, and Rockingham) is a long-established rental hub. This area includes many 1960s-1980s low-rise apartments and townhomes and remains popular with families, students (close to MSVU campus), and newcomers. It tends to offer larger unit sizes at somewhat lower rents than downtown, making it attractive for those needing space on a budget.
Vacancy in Mainland South (which includes Fairview/Armdale) was only about 1.5% – the highest in the city in 2023, which still signifies a very tight market. Investors can find duplexes or small apartment blocks in these neighborhoods with decent cap rates, and new zoning will allow adding basement suites or extra units. The planned expansion of transit routes through this corridor and the presence of shopping centers (Bayers Lake) support continued rental demand.
Further out along Herring Cove Road, Spryfield has historically been a more affordable suburban area but is now on the city's radar for development. With the city designating "Suburban Opportunity Sites" in such areas for higher density, we can expect more townhome and low-rise apartments to sprout here. Spryfield's vacancy was around 1.5% in 2023 (part of Mainland South), and rents have been rising from a low base.
An individual investor could pick up a multi-unit property here at a relatively low price point and benefit as the area grows. Improvements to transit and amenities (new grocery stores, rec centers) are making Spryfield more attractive to renters. Similar "fringe" locales like Lower Sackville (a suburban community 20 minutes north) also offer solid rental demand with lower entry costs. Sackville's sales market had one of the highest sale-to-list ratios in 2023, reflecting how sought-after its homes are – a positive sign for buy-to-let investors as well.
The Bedford region northwest of Halifax is experiencing a boom in new construction. Luxury apartment projects in Larry Uteck Blvd/Bedford South have added hundreds of units. Notably, the outlying "remainder of Halifax" zone (which includes Bedford) had the highest average rents (~$1,922) in the region, yet still posted very low vacancy (~0.5%), indicating strong absorption of new supply.
While most large developments here are by big builders, small investors could focus on older multi-unit rentals in Bedford's core or neighboring Sackville, where population growth (young families, military personnel from nearby bases) drives rental need. Bedford's upcoming rapid transit route and waterfront projects could further boost its appeal. Investors should be mindful that prices in Bedford are higher and many new units target upscale renters – but demand remains strong for quality rentals, making it a noteworthy market for long-term growth.
Investing in Halifax's small multi-unit market in 2025 comes with plenty of upside, but also a set of challenges and risks that individual investors should carefully consider:
Building or upgrading "missing middle" housing has become more expensive. Halifax's residential construction cost index jumped 8.3% in 2023 due to rising material, labor, and fuel costs. A shortage of skilled trades locally means projects can face delays and budget overruns – indeed, despite record housing starts, completions actually fell 3.5% in 2023 because builders struggled to finish projects amid capacity constraints.
For a small investor, this means renovation budgets should include a contingency, and finding reliable contractors may be challenging. Scaling up from a single-family flip to a multi-unit build requires navigating permits, codes, and potential NIMBY opposition, which can add time and cost.
After a long period of ultra-low rates, the financing environment has tightened. The Bank of Canada raised policy rates sharply in 2022, pushing typical investment property mortgage rates into the 5–6% range. This increases carrying costs and can squeeze cash flow, especially since cap rates in Halifax are in the 4–5% range.
While there is optimism that rates may stabilize or even tick down by late 2025 (the BoC made a surprise half-point cut in Dec 2024 amidst slowing inflation), investors must be prepared for higher debt servicing costs in the short term. Lenders may also be more cautious on small rental properties, demanding larger down payments or strong financials. Interest rate risk is a factor – if an investor takes a variable-rate loan, further hikes (if inflation resurges) could erode profitability.
Government rules can impact returns and strategies. Rent control is the big one in Nova Scotia – the 5% cap on renewals, now likely extended to 2027, limits how quickly you can raise rents on long-term tenants. If inflation in utilities or taxes outpaces 5%, landlords could feel a profit squeeze.
Additionally, Nova Scotia is continually tweaking landlord-tenant regulations; recent changes aim to curb "renovictions" and speed up dispute resolution. Investors should stay up-to-date on tenancy law to avoid legal pitfalls when removing units from the market for renovations, etc.
On the flip side, zoning reforms – while opening opportunities – are new and untested. There may be a learning curve with permit officials on the new fourplex rules, and not-in-my-backyard pushback in some neighborhoods could still pose hurdles. Policy support (like the HST rebate on rentals) could also change with new governments, so one should strike while the iron is hot.
Another risk is localized oversupply of luxury rentals. Halifax is seeing a surge of new apartments, many of them high-end units downtown and in Bedford. In 2024, rental demand slowed for premium units and some landlords even offered incentives (e.g. a month free) to fill them.
If you plan to invest in or build a small apartment targeting the top of the market, be cautious – tenants have become price-sensitive, and expensive units can sit vacant longer. It may be wiser to target the middle segment (modestly priced, quality units), where vacancy remains ultra-low (<1% for units under $1300).
Halifax's economy is strong, but a recession or dip in immigration could quickly impact demand for pricey rentals, whereas affordable units would still be absorbed. Keep an eye on population flows: the latest data shows migration has eased slightly (fewer international students and interprovincial movers in 2024), which is a reminder that the recent blistering demand may cool somewhat.
Small investors, especially those from outside Nova Scotia, should budget for transaction costs. The non-resident deed transfer tax (now 10%) can add tens of thousands to your purchase if you're not a Nova Scotia resident (though you can avoid the annual non-resident property tax by renting the unit out). Halifax's property taxes are not insignificant either, and assessments have been rising with property values. Insurance costs for rental properties have also been climbing nationwide. All these expenses mean an investor needs sufficient cash reserves to handle the carrying costs, especially in the first year of ownership.
In summary, while the outlook for Halifax's small multi-unit market is positive, investors should approach with a clear strategy that accounts for higher financing and construction costs, adheres to the regulatory environment, and targets the right segment of the market to avoid undue risk.
Given the trends and challenges above, how can individual or small investors best position themselves in Halifax's 2025 "missing middle" rental market? Here are some strategic insights:
Take advantage of Halifax's pro-density policy by creating new units. If you own a single-family home on the peninsula or an underutilized lot, consider adding secondary suites or infilling a duplex/fourplex now that it's permitted as-of-right. Smaller developers can now be competitive – e.g. buy an older 3-bedroom home in a central area and convert it into two modern apartments. These modestly sized projects can significantly boost your rental income and property value in a supply-constrained market.
The ability to build up to 4 units (and even more on large ER-3 zoned lots) means one property can generate multiple revenue streams. Investors should consult local planners or development consultants to navigate the building code (Halifax is even examining relaxing some code requirements, like secondary egress rules, to make small multi-unit construction easier). By being an early mover in the missing middle space, you can meet an underserved market and potentially benefit from appreciation as these housing types become more common.
The data clearly shows the deepest demand is for mid-priced rentals – not luxury penthouses, but clean, safe, reasonably modern units that working professionals and students can afford. As an investor, you can strategically position your units to target this segment. This might mean choosing a neighborhood like Fairview or Dartmouth where rents are naturally mid-range, or offering inclusive utilities or slightly more basic finishes to keep rents in the sweet spot of the market.
Keeping units affordable (while still well-maintained) not only fills them faster, it also insulates you from competition – there are fewer new mid-market rentals being built, since most developers aim high-end. By providing "missing middle" affordability, you also align with government incentives; for example, CMHC's programs offer favourable financing terms for projects that include affordable units. Occupancy will remain high if you cater to the broad middle of the renter pool that is currently struggling to find options in Halifax's pricey market.
To navigate high interest rates, investors should be proactive in their financing strategy. It could be beneficial to lock in a longer-term mortgage if rates dip in 2025 to secure stability in debt costs. Also explore innovative financing: owners of small multis might qualify for CMHC's MLI Select insurance program, which can extend amortizations up to 50 years for rental properties meeting certain affordability or energy criteria – dramatically improving cash flow.
Look into provincial grants or rebates as well; for example, efficiency grants for insulating older buildings can not only lower expenses but sometimes come with cash incentives. On the revenue side, plan for the rent cap: structure leases smartly (e.g. use fixed-term leases where allowable, so you can reset rent at renewal in a tight market) and don't underestimate the value of tenant retention. A good tenant who pays on time is worth keeping at a 5% annual increase rather than risking a vacancy. However, when turnover does occur, be prepared to refresh the unit and capture the market rent jump, which in Halifax has been 20–30% for vacated units. In short, optimize what you can control: financing, operating costs, and unit quality, to maximize net returns.
When selecting properties, think long-term about Halifax's growth trajectory. Areas near planned transit lines, universities, or major employers offer some hedge that demand will persist. For instance, buying near a future Bus Rapid Transit route or in a neighborhood slated for revitalization (like parts of Dartmouth or Spryfield) could mean not only strong rental income today but significant appreciation tomorrow.
Pay attention to Halifax's municipal plans – the city is investing in transit corridors and town center developments outside the downtown core, which can elevate surrounding property values. Also consider the tenant profile of each area: a triplex in South End near Dalhousie will reliably attract students (with peak demand every fall), whereas a duplex in Clayton Park might draw young families or newcomers who stay for years. Match your investment to the tenant base you're comfortable serving and that aligns with your rent goals. By positioning yourself in the right neighborhood, you capitalize on the micro-market dynamics and avoid being stuck with a property in a stagnant area.
Finally, individual investors should stay educated on the fast-evolving real estate climate in Halifax. Market conditions in 2025 are not static. Keep an eye on indicators like vacancy rates and new construction in your area – if vacancy starts creeping up, be ready to adjust (perhaps offer promotions or amenities to stay competitive). Stay aware of provincial policy shifts: for example, if Nova Scotia introduces new housing incentives or tweaks rent regulations, these can directly impact your strategy.
Engaging with local landlord associations or real estate investment groups can provide early warnings on issues like property tax reassessments or utility rate hikes. The good news is Halifax's outlook remains fundamentally positive – strong economy, population growth (even if a bit slower), and political will to add housing. By being flexible and well-informed, small investors can successfully ride the 2025 market wave. The "missing middle" focus of Halifax presents a unique opportunity for those ready to supply the kind of housing the city desperately needs – and to reap solid returns while doing so.
Contact Helio Urban Development to discuss your investment goals and discover how our fixed-price building model can help you capitalize on Halifax's rental market opportunities.
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