Soaring prices mean so-called “luxury” home sales of $1 million or more now account for nearly one in five Ottawa residential transactions – up from less than five per cent just two years ago, according to a new report.
Resale transactions in the $1-million-to-$3.99-million range make up 18 per cent of all home deals in Ottawa so far in 2022, Engel & Volkers says in its mid-year luxury real estate market report released this week.
That’s a dramatic shift from pre-pandemic market conditions, the real estate firm said in the report. Such “luxury” homes accounted for just four per cent of total sales in mid-2020 and nine per cent in 2021, Engel & Volkers said, noting “a COVID buying frenzy” has driven prices to historic highs in the capital.
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The report cited the city’s “stable work industries” and interprovincial migration as key factors pushing prices upward.
“While Ottawa is often thought of as a government town, it is home to more than 1,500 advanced technology companies which employ more than 65,000 people,” the market outlook said. “These high earners, and those migrating from more expensive markets after cashing in, have driven consistent price growth.”
According to Engel & Volkers, a total of 1,400 residential-class properties and condos changed hands for between $1 million and $3.99 million in the first six months of 2022. An additional three homes cracked the $4-million barrier.
Not surprisingly, the firm singled out a number of high-income neighbourhoods as particular hotbeds for luxury sales, including Rockcliffe Park, Manotick, Westboro and the Glebe.
Still, the report suggested the Ottawa market is showing signs of cooling off after 24 months of virtually non-stop growth.
The number of luxury transactions has been steadily declining since hitting a high-water mark of 329 in March, Engel & Volkers noted. Last month, there were 173 home sales in Ottawa valued at $1 million or more.
“After two years of consistent record-breaking price growth and shrinking inventory, the Ottawa market is returning to a more balanced pace,” the report said, adding houses “are sitting on the market longer than they had in 2020 and 2021, and the interest rate hikes have caused homebuyers to re-think their budget.”
But a lack of supply remains an issue, Engel & Volkers added, noting the city still has just two months’ worth of housing inventory for sale.
“This means Ottawa is still a strong seller’s market, but the conditions are not as extreme as previous years,” the company said.
The report comes a week after another major Canadian real estate brokerage said it was downgrading its growth forecast for Ottawa home prices for the rest of 2022.
Royal LePage said in its latest house price survey released last week that 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’s 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.
Royal LePage said it revised its forecast downward “to reflect a shift to a more balanced market.”
The firm said 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.
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