A new report from Re/Max Canada found that the Ottawa condo market stalled in the first eight months of 2024, with affordability the top concern on the minds of potential buyers.
However, activity is expected to pick up next spring, according to the report, which examined condominium activity from January to August of this year.
“Downsizing empty nesters, retirees and first-time homebuyers fuelled steady demand in the Ottawa condo market in 2024,” Re/Max said about the findings in the report, which was released Wednesday. “But the number of condominium apartments and walk-ups sold between January and August fell short of year-ago levels.”
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In Ottawa, 1,407 condos changed hands in the first eight months of 2024, a drop of 0.9 per cent compared to the previous year. Prices, meanwhile, saw an increase of 2.3 per cent compared to the previous year, with an average of $447,042.
Re/Max said buyers remain wary.
“Affordability remains a major concern in the Ottawa housing market, despite changes to monetary policy in recent months,” it said. “First-time buyers find themselves locked out of the freehold market, given high interest rates and stringent lending policies.”
Hesitation from buyers has led inventory levels to increase year-over-year, with more than 636 active listings in August, about 44.5 per cent more than in 2023, Re/Max said.
In the luxury market, inventory levels are tight, with fewer options at the $850,000 or above price point.
First-time buyers, the report added, are leaning toward condos priced around $500,000, with low monthly maintenance fees and parking.
Centretown and Dows Lake are popular locations. While less expensive units priced at around $350,000 are available in older buildings, monthly condo fees tend to be higher. Meanwhile, suburban condos in Kanata, Barrhaven and Orleans have been selling for $375,000 to $400,000, the report said.
Re/Max said the majority of activity in the local condo market is coming from empty nesters and retirees looking to downsize. Walkable and “community-forward” neighbourhoods such as Westboro, the Golden Triangle, Centretown and areas of gentrification such as the Glebe, Lansdowne and Old Ottawa East were the most desirable for those buyers, who are looking for proximity to restaurants, cafes, shops and walking paths.
Despite the stall in sales in 2024, Re/Max said activity is expected to pick up in the coming months.
“As consumer confidence grows with each interest rate cut, more and more buyers are expected to return to the Ottawa condo market,” the report said. “Fourth-quarter sales are expected to be comparable to year-ago levels, but the outlook for spring of 2025 appears to be bright. Pent-up demand is building and those first into the market will reap the rewards.”
Condo inventory growing nationally
Nationally, condo inventory is on the rise in most major markets as more sellers list their properties in anticipation of growing demand from buyers, the report said.
The report found B.C.’s Fraser Valley led year-over-year inventory growth at 58.7 per cent, followed by the Greater Toronto Area at 52.8 per cent and Calgary at 52.4 per cent.
Those regions were followed by Ottawa, with 44.5 per cent inventory growth from the same period last year, Edmonton at 17.7 per cent, Halifax at 8.1 per cent and Vancouver at 7.3 per cent.
The real estate firm attributed the influx of supply to sellers’ expectations that demand will pick up in the fourth quarter of this year and early 2025.
“High interest rates and stringent lending policies pummelled first-time buyers in recent years, preventing many from reaching their home-ownership goal, despite having to pay record high rental costs that mirrored mortgage payments,” said Re/Max Canada president Christopher Alexander in a news release.
“The current lull is the calm before the storm. Come spring of 2025, pent-up demand is expected to fuel stronger market activity, particularly at entry-level price points, as both first-time buyers and investors once again vie for affordable condominium product.”
The GTA was the only region where average condo prices declined year-over-year, with a 1.9 per cent drop to $732,648 for the period examined.
Calgary led the way for average price growth, posting a 15-per-cent gain to reach $347,203. Meanwhile, the Greater Vancouver Region was the most expensive market for condos with an average price of $823,550, up 1.9 per cent from 2023.
Edmonton was the cheapest, with an average price of $200,951, however, that was the second biggest gain of any market, up four per cent year-over-year.
For the first eight months of the year, Edmonton posted a 36.7-per-cent increase in sales compared with the same period in 2023, even as most regions saw sales decline from last year.
The GTA, Greater Vancouver and Fraser Valley each recorded sales declines of more than eight per cent.
“The current uptick in inventory levels is drawing more traffic to listings, yet buyers remain somewhat skittish across the country,” the report said.
“The first two Bank of Canada interest rate cuts did little to entice prospective homebuyers to engage in the market, given the degree of rate increases that took place. However, with further rate reductions expected and policy adjustments to address affordability and ease entry into the market, activity will likely start to climb, particularly among end users.”
The report warned that Toronto, where oversupply and lagging demand have plagued the condo market, may be the last market to emerge from sluggish conditions.
It said inventory levels have continued to climb as available resale units were joined by an influx of new completions, noting 20,000 new condo units are planned for the GTA in 2025, followed by 30,000 in 2026 and 40,000 in 2027.
“With a six-month supply of condominiums currently available for sale, the GTA market is heading into clear buyers’ territory,” the report said.
“With values at or near bottom and Bank of Canada overnight rates trending lower, the fall market may represent the perfect storm for first-time buyers … As absorption rates increase, the current oversupply will be diminished and demand will take flight, placing upward pressure on average prices once again.”
With files from The Canadian Press
