Price ceilings on the rise: Surge in million-dollar sales pushes average Ottawa home value to new heights

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Fuelled by a spike in luxury home sales, the average price of a residential property in Ottawa jumped more than 30 per cent in January compared with a year earlier, the city’s real estate board says.

The average price of a residential-class home in the capital was nearly $680,000 last month, according to the latest figures from the Ottawa Real Estate Board, up from $516,000 in January 2019. 

It’s the continuation of a trend that has seen house prices rise steadily over the past 12 months as the available inventory of properties struggles to keep up with surging demand. 

Although the volume of homes on the market did rise slightly from December to January, it remains 43 per cent lower than it was a year ago, OREB president Debra Wright noted.

“This inventory shortage coupled with strong demand triggered a brisk pace to the market,” Wright said in a news release on Wednesday. “We would have certainly seen higher sales numbers if there were more properties available because the demand is definitely there.”

Million-dollar sales surge

Still, the veteran realtor cautioned against reading too much into January’s dramatic price hike, noting that an unusually high number of transactions in “the upper end of the market” at the start of 2021 skewed the overall average. 

OREB said 63 properties sold for at least $1 million last month, compared with 16 transactions valued at $1 million-plus in January 2020.

“Sustained price movements are better reflected during the mid to latter part of the year, where trends begin to emerge, and comparisons can be drawn,” Wright explained.

OREB members sold 964 properties last month, up from 778 a year ago and well above the five-year average of 786. A total of 674 residential-class properties changed hands in January, up 21 per cent from a year earlier, while 290 condos were sold, a year-over-year increase of 31 per cent.

While those numbers are almost on par with December, Wright suggested that tougher measures imposed just after Christmas to rein in the spread of COVID-19 might have put a damper on sales activity in the first few weeks of the new year.

“The effects of this second lockdown will not be entirely measurable until the coming months, dependent on when the mandated stay-at-home order is retracted,” she said. 

“If the lockdown is extended, that could affect the market in the longer term; however, as we saw last year, the market was resilient throughout and is being driven by the needs of buyers and sellers.”

In a report released in December, Royal LePage predicted the aggregate price of a home in the capital will rise 11.5 per cent in 2021, well ahead of the overall average increase of 5.5 per cent across all major Canadian markets. 

The brokerage said the spike is being fuelled by the region’s stable government- and tech-driven economy, an influx of buyers from the Toronto area looking for better value and surging demand for roomier properties in the COVID-19 era.