Local home prices will continue to rise next year at the same modest pace as in 2012 as would-be buyers continue to be hampered by concerns about federal government layoffs and tightening mortgage rules, a report released Wednesday says.
Real estate company Re/Max expects the average Ottawa home price to go up by about $8,000 in 2012, the smallest increase in the past five years. That will increase by an even smaller margin in 2013, when Re/Max is predicting a $7,000 jump.
Home sales are also expected to decrease slightly.
The report predicts 14,500 homes will change hands in 2012, down from 14,551 the year before. The number of home sales this year is expected to remain unchanged in 2013.
The market started out strong in 2012, the report said, but quickly slowed as the latest round of federal government changes to mortgage rules took effect. The most recent change happened in June, when Finance Minister Jim Flaherty shortened the maximum term for an insured mortgage from 30 years to 25.
However the report said that won’t stop first-time home buyers from entering the market, as the slow growth rate of prices means affordability will offset the shrinking availability of mortgages. This will be particularly evident in “fringe” parts of the city, such as Mechanicsville and Vanier.
Re/Max said the spectre of layoffs in the federal civil service, one of the region’s largest employers, also had an effect as the governing Conservatives look for ways to rein in a multibillion-dollar deficit.