Bubble Contagion? Eastern Canada Home Prices Retain The Frothiest Growth

Canadian real estate prices surged after rate cuts, and have generally cooled since rates began to normalize. Canadian Real Estate Association (CREA) data shows the composite benchmark, which represents a typical home, ripped higher after rate cuts in March 2020 and peaked when rates began to normalize in 2022. A big exception is Eastern Canada, where home prices didn’t just see the largest increase after rate cuts. They only saw a minimal correction when rates began climbing, retaining the title of frothiest growth across the country. 

Canadian Real Estate Prices Have Given Up Substantial Gains

First let’s get some market context by looking at the national composite benchmark. Canadian real estate prices peaked in March 2022 with a typical home hitting $855,800, an increase of 54.8% since rate cuts began in March 2020. Since then, home prices have corrected and prices remain 32.0% higher than where they started, with a benchmark price of $729,700 as of March 2024. 

Quite the rollercoaster ride for just a 2 year window—peaking exactly two years ago, and then cutting that growth significantly over the next two years. 

Eastern Canadian Provinces Retained Frothy Home Price Growth

The percent change in price for a composite benchmark (typical) home across Canadian provinces since March 2020, when interest rates were initially cut.

Source: CREA; Better Dwelling.

Eastern Canadian provinces generally saw the frothiest growth across the country. From March 2020 to their respective peak, home prices launched the most in Nova Scotia (+71.7%), New Brunswick (+70.3%), and PEI (+66.1%). These markets all peaked shortly after rates began to rise, within 3 months of the first hike in 2022. 

Only four provinces outperformed the national growth when it was at its peak rate, and three were on the East Coast. It’s also worth noting after the first rate hike, credit would not have taken a significant hit, so the probability this was exuberance driven is very high, not unlike the jolt it delivered to Ontario’s cottage country. 

Eastern Canada Home Prices Have Retained Frothy Growth Since Rate Cuts

The percent change in composite benchmark price from March 2020 to peak in each province vs the change to March 2024.

Source: CREA; Better Dwelling.

While virtually every market is off the peak, Eastern Canada still leads for growth. Looking beyond the record highs, From March 2020 to March 2024—the same three provinces retain the title of highest price growth, just re-ordered. Topping the list is New Brunswick (+69.4%), followed by Nova Scotia (+60.4%), and PEI (+59.3%). Not much of a correction was observed in the provinces. At least for now.  

Canada’s two most expensive markets had a very different story over the past 4 years. From 2020 to peak, Ontario (+64.4%) outperformed the national benchmark. While BC (+51.6%) slightly underperformed over this period, it remains Canada’s most expensive market. 

Unlike Eastern Canadian provinces, these markets saw a big pullback as rates normalize. As of March 2024, the growth from 2020 was cut significantly in both Ontario (+35.2%), and BC (+37.5%). Though it’s worth remembering that Ontario is the only province to have seen a double-digit rate of correction as of this point. 

Most people think of pricey places like BC and Ontario when they think of frothy growth, not Eastern Canada. It’s hard to say whether the region’s price growth is justified, but it does resemble what experts refer to as “bubble contagion.” 

This is when a region begins to command higher and higher prices based solely on being more affordable. Bubbles tend to dismiss issues like income growth and amenities, but instead focus on exuberant buyers (and investors) trying to purchase whatever they can finance. 



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  • Omar 1 month ago

    Are these people from Eastern Canada buying them? Or just people from Ontario looking to buy anything they can, which happens to be only available in Eastern Canada.

    • Oh Canada 1 month ago

      I’m from St John. It *WAS* people from Ontario during the pandemic but they seem to be flipping them back to locals/investors who think they’re going to join the laborless gentry and be real estate investors, and collect rent.

      The real estate agents here are toxic af.

      • Kelly 1 month ago

        haha. I’m from Halifax and the people with no skills that skipped university are now all real estate agents and landlords. It’s a bubble, even if they ram in as many kids that can’t afford rent as possible.

  • Jason Chau 1 month ago

    No escaping a credit bubble. Like how the Fed needed to increase spending for an “emergency,” but the emergency spending is somehow the amount they’re spending annually.

    The scale of graft in the West is now on par with the issues we used to see in developing countries.

    • Trader Jim 1 month ago

      Bingo. Easy credit expands budgets to absorb prices increases more rapidly, since money has no real value (it’s trading lower than inflation). When value is restored and capital retains value, it should correct like in Ontario’s cottage country.

      Areas with the least amount of coverage are usually the last to find out what the actual F just happened. Ontario rolled back 30 points, but Nova Scotia 10? Yeah, that’s not how that works. But glta!

      • Mortgage Guy 1 month ago

        Us old timers that remember the 90s also remember

        i) population growth will prevent price drops;
        ii) it’s just temporary, prices will rise as soon as rates jump;
        iii) why aren’t prices rising, rates are rising and the population is still growing?

        They cut rates before recession once in 2020, and it sends prices higher since they goof’d the GDP growth calculations. Now everyone has forgotten all home price corrections happen during falling rates. It’s the rising rates that cause people to take a breather and realize how dumb they’re acting.

  • Kelly 1 month ago

    Speaking of “no amenities,” I grew up in Halifax and moved to Alberta (via Ontario) a few years ago.

    I kept saying I want to go back, but now it’s $500k for a house in rural Nova Scotia. I noticed they’re all being sold vacant too. One can only assume they’re learning what a septic leaching bed is, and the fact there’s no high speed internet. Starlink might be great in places that aren’t on the ocean, but when you get a storm all winter and you’re lagging on Zoom, you realize you’re not going very far working that remote.

    • Bluenose 1 month ago

      Validation. If it sells, they didn’t overpay. If it doesn’t, well… it’ll be a fun lesson for the people who fled Toronto to live in the country of a province they’ve never been.

      If they think finding a doctor was hard in Toronto, wait until they realize that hospitals in the country in NS have business hours. Some people are built for rural living, but it’s hard. But those people are usually the types that work so hard they can make it where ever they’re living. They aren’t fleeing to a region under the impression they have a little money, so they can do better than locals.

  • JF 1 month ago

    … With “Toronto” Dominion Bank leading the Money Laundering charge in Canada, what else can we expect?? 😛

    Ponzi-Schemes for Organized Crime and foreign Millionaires….

  • CD 1 month ago

    Even though we made our plan to move to NS years ago, the prices were already ridiculous when we finally got here. I know that we overpaid but we’re not investors, and we plan to keep the property in our family so I don’t see a loss. Owning a house is a learning curve for anyone, regardless of origin.

    It’s pretty sickening to see what investors and RA agents have done to this country. I love the term “laborless gentry” above. lol!

    Anyway I’m just glad to see BD actually including the east coast in their scope now.

    • RW 1 month ago

      Could be wrong but I think Nova Scotia including prices in CREA is relatively new. I don’t recall seeing it in the HPI a few years ago, and I’m from Halifax so I’m certain I checked.

      But you’re probably right. I recall homes on the Eastern Shore being dirt cheap, since they’re basically just shacks built to house low income families going for $50k to $100k. Now they’re $500k+, and I’m curious where all those families went. I have my doubts they’re the new money elites.

  • Jones 1 month ago

    Canada is a great deal for newcomers who don’t have a job offer before landing. Sell their family properties and assets in the emerging markets, and then move to Canada so that a greedy slumlord can siphon off the proceeds by charging high rents.

    It’s like people migrating to Canada these days just exist to pay high rent which enables the greedy slumlord to buy more rental properties to charge high rents.

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