Persistent supply issues drive Ottawa home prices up 19% in January: OREB

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Fewer homes changed hands in January than a year earlier, but the city’s chronic housing supply shortage drove prices up nearly 20 per cent compared with the start of 2019, the Ottawa Real Estate Board says.

OREB members sold 780 houses last month, down 4.5 per cent year-over-year. Sales of residential-class properties dropped 8.4 per cent to 558, while condo transactions were up 6.7 per cent to 222.

Meanwhile, overall prices ​– which rose about nine per cent in 2019 ​– continued their steady climb in the new year. The average sale price of a condo in January was $338,077, up a whopping 19.1 per cent from a year earlier, while the average residential property jumped 19.3 per cent to $516,229.

Though the number of transactions in January was down from the previous year, it was still well above the five-year average of 713. But new OREB president Deborah Burgoyne noted that just 1,082 new listings came on the market last month, far below the five-year average of 1,651, suggesting that “persistent supply challenges seem to have finally caught up” with the Ottawa market.

“We don’t expect this trajectory to change anytime in the foreseeable future,” Burgoyne said in a statement. “The supply chain needs to be buffered at all points along the continuum from first-time and move-up buyers, to downsizing boomers as well as renters. They are all interconnected links in the housing chain.”

The majority of condo sales last month were in the $200,000-to-$349,999 range, which accounted for 55 per cent of all units sold. The most active price bracket in the residential class was the $400,000-to-$549,999 range, which made up 40 per cent of transactions.

Despite January’s significant year-over-year price hikes, Burgoyne called the increases “reasonable” and “sustainable,” adding she doesn’t expect the market to cool off any time soon.

“If buyers are waiting for prices to decline, based on historical trends, it’s not likely,” she said. “It’s a challenging market for everyone.”

In a report released in December, Royal LePage predicted the average aggregate price of a home in Ottawa will rise faster this year than in the rest of Canada. The aggregate price of a home in the capital is expected to rise 4.5 per cent year-over-year, the real estate firm said, pushing the typical sale price of an Ottawa home to $516,200.