Home prices in Ottawa continue to rise at roughly twice the city’s inflation rate, but are still a bargain compared to many other urban centres across the country, a new report says.
The aggregate price of a home in Ottawa rose to $411,654, a 3.6 per cent year-over-year in the third quarter of the year, according to a Royal LePage House Price Survey released Thursday.To break it down further, the median price of a two-storey home rose over the same period to $429,788, an increase of 3.8 per cent, and the median price for a bungalow rose to $402,844, an increase of 4.2 per cent.
Condominium prices increased one per cent year-over-year to $313,612.
To put those figures in the context, Ottawa’s consumer price index is projected to grow 1.4 per cent this year, according to the Conference Board of Canada.
“The Ottawa market is benefiting from increased buyer confidence given the strong employment numbers, limited inventory and low interest rates,” said John Rogan, the broker of record at Royal LePage Performance Realty.
He said that the change in government a year ago has brought a new wave of public servants to the city, snapping up inventory and forcing buyers to compete.
“We anticipate Ottawa’s balanced market to become even more of a buyer’s market moving into the fall as inventory levels out,” added Mr. Rogan.
Ottawa’s home prices still fall below the national aggregate, which increased in the three-month period that ended Sept. 30 to $545,414, a 12 per cent increase year-over-year.
That national figure, which is based on 53 of the country's largest real estate markets, grew on the strength of what Royal LePage calls Vancouver’s “final hurrah.”
House prices in Greater Vancouver grew 30.6 per cent year-over-year in the third quarter of the year to an average of $1.19 million, up from $914,705 during the same quarter last year.
The average price of a home in Greater Toronto rose to $693,154 over the third quarter, up 13.6 per cent compared to last year, when the average home price was $610,308. In Edmonton, where the decline in oil prices has hurt the real estate market, the average cost of a home was down 3.1 per cent to $374,712 from $386,829 a year ago.
Royal LePage CEO Phil Soper said he expects that price growth in Vancouver will slow or even reverse in the months ahead as the effects of recent federal and provincial government rule changes begin to be felt.
In August, the B.C. government introduced a 15 per cent tax on foreigners purchasing homes in Vancouver.
Home sales in the city have been falling since then – with recently released figures indicating a 32.6 per cent drop in September compared to the same month last year – but prices have continued to rise.
"It often takes about six months ... for prices to catch up with a change in demand, either on the upside or the downside," said Soper.
However, he adds that the trend of declining home sales started long before the introduction of the foreign buyer tax. Many would-be buyers have simply moved to the sidelines as prices have spiralled out of their reach, he said.
Soper said the new tax can't be blamed as the sole cause if home prices begin to drop in the coming quarters, but it certainly may be the catalyst.
"You take a lineman in professional football – a great, big human being – and they're sort of teetering on their heels," he said.
"A child comes along and pushes them on their chest and they topple over. The tax impacted a very small group of people in a very narrow geographic and house price range in one city, yet it came at a time when the market was already cooling. It represents that push in the chest to something that was already ready to change."
As for new mortgage rules introduced by the federal government earlier this month, Soper said fears associated with those changes have been exaggerated.
He predicts that prices in Ontario and many other parts of the country will continue to rise, in spite of new measures including a requirement that lenders apply stress tests to all mortgage borrowers.
"There will be some transactions taken out of play with the new regulations," said Mr. Soper. "It's just a mathematical certainty. But I don't think it will be enough to reverse the positive trend that we see across the country."
-With reports by the Canadian Press