Royal LePage is cutting its forecast for growth in home prices in Ottawa this year after prices in the second quarter fell compared with the first three months of the year.
The real estate brokerage says it now expects the aggregate price of a home in the nation’s capital will rise 10 per cent in the fourth quarter of this year compared with the same quarter in 2021.
That forecast is down from the firm’s April estimate, which projected that Ottawa home prices would jump 13 per cent in the fourth quarter compared with the same period a year earlier.
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Royal LePage says it revised its forecast downward “to reflect a shift to a more balanced market.”
In its latest house price survey, the real estate brokerage says the aggregate price of a home in Ottawa in the second quarter was $800,300, up 11.5 per cent from a year ago. However, that was down 1.1 per cent compared with the record high prices set in the first quarter of 2022.
The median price of a single-family detached home rose 10 per cent year-over-year in the second quarter to $930,500, while the median condo price fell one per cent to $416,900 in the same period.
Buyer demand ‘remains strong’
Royal LePage Performance Realty broker John Rogan said the city remains an attractive market for buyers from other parts of the country due to its stable economy and relative affordability.
“Despite recent interest rate hikes and increasing home prices, buyer demand remains strong in the city of Ottawa,” Rogan said in a statement.
“However, in recent months homebuyers are proving more cautious, taking more time before making an offer and reintroducing conditions. Inventory is beginning to creep up slowly, but demand continues to outpace supply. And, in some high-demand areas, a low supply of housing continues to drive multiple-offer scenarios.”
Royal LePage says it now expects the aggregate price of a home in Canada in the fourth quarter of this year will be up five per cent compared with the same quarter in 2021.
The forecast is down from an April estimate for a 15 per cent year-over-year increase for the fourth quarter.
The brokerage says it lowered the forecast following more aggressive than expected interest rate hikes by the Bank of Canada, resulting in an expected temporary drop in demand in parts of southern Ontario and British Columbia.
Royal LePage says the aggregate price of a home in Canada in the second quarter was $815,000, up 12.1 per cent compared with a year ago. But it was down 4.9 per cent compared with its record high in the first quarter of this year.
The firm says it was the first quarter in more than three years to post a quarter-over-quarter decline in home prices.
“Some of the heat that was driving the market cooled during the quarter as rising interest rates coupled with economic uncertainty undermined consumer confidence and pushed buyers to the sidelines,” Royal LePage CEO Phil Soper said in a statement.
“We have significantly reduced our outlook for 2022, however home prices are still forecast to end the year higher than 2021 and well above pre-pandemic norms.”
– With additional reporting from the Canadian Press
