A new report predicts average home sale prices in Ottawa will rise four per cent in 2023 as first-time buyers continue to drive demand in a seller’s market.
In the report released Tuesday, Re/Max Canada says it expects the average sale price of a home in Ottawa to rise to $683,000 next year, up from just under $657,000 at the end of October.
The real estate firm says sales are expected to tick up 1.5 per cent in 2023, with “affordably priced” townhomes seeing the most activity.
“First-time homebuyers are driving demand in the region due to its relative affordability, a trend that is expected to carry on next year,” the report said.
Other trends Re/Max highlighted include more multigenerational living arrangements and less upward movement in the market as prices continue to rise.
The company predicts Ottawa will remain a seller’s market into the third quarter of next year, when more balance is expected to return as rising interest rates continue to drive up mortgage costs and cool overall activity.
Re/Max notes that demand still outpaces supply in the National Capital Region, “with many new construction developments being halted due to increased development fees and material and labour shortages.”
The firm also anticipates demand for multi-residential projects will continue to grow and more space on existing properties will be converted into small “coach houses” as single-family dwellings become increasingly less affordable to rent.
The report comes after the Canada Mortgage and Housing Corp. said Ottawa-Gatineau’s annual pace of housing starts fell significantly in October due to rising construction costs, soaring interest rates and labour shortages.
Newly elected mayor Mark Sutcliffe has pledged to cut red tape and make it easier to build new homes as well as offer incentives for builders to construct more affordable housing as part of a push to see 100,000 new dwellings built in Ottawa over the next decade.
According to the Ottawa Real Estate Board, resale home prices fell an average of five per cent last month compared with a year earlier as sales continued to decline in the face of rising interest rates.
OREB members sold 987 residential properties in October, down 41 per cent year-over-year.
Still, Re/Max is predicting Ottawa will buck a national trend that’s expected to see home prices decline across the country in 2023.
The firm anticipates average home sale prices in Canada will fall 3.3 per cent next year, with the biggest declines expected in Ontario and Western Canada, where some markets may see prices fall 10 to 15 per cent.
The report made the forecast using surveys of brokers and agents from across the country. Home prices in Canada have fallen this year as the real estate market has cooled amid higher interest rates.
Re/Max says 60 per cent of housing markets in Canada are expected to be in a balanced position in 2023. However, some markets are expected to see larger moves in prices.
Prices in Kelowna, B.C., Nanaimo, B.C., and Durham, Ont., are predicted to drop 10 per cent in 2023, while prices in Barrie are expected to fall 15 per cent.
Prices in the Greater Toronto Area are estimated to fall 11.8 per cent, while Greater Vancouver is expected to decline five per cent.
Meanwhile, Calgary is expected to see a seven per cent increase in sale prices and Edmonton is forecast for a three per cent gain. Halifax is expected to gain eight per cent.
– With additional reporting from the Canadian Press