The aggregate home price in Ottawa fell more than 10 per cent in the first quarter of 2023 compared with a year earlier, but local home prices are still expected to increase before the year is out, Royal LePage said Thursday.
The real estate firm reiterated its forecast from December that the aggregate price of a home in Ottawa will be two per cent higher in the fourth quarter of this year than in the final quarter of 2022.
According to Royal LePage’s first-quarter 2023 house price survey and market forecast, the aggregate price of a home in the capital was $725,700 in the first three months of the year, down 10.3 per cent from the first quarter of 2022.
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The median price of a single-family detached house dropped 12.2 per cent to $831,600, the company said, while the median condominium price decreased 11.2 per cent to $384,000 in the same period.
“Real estate in Ottawa was quieter than normal in the first quarter but is tracking toward pre-pandemic levels as buyers return to the market,” John Rogan, a broker at Royal LePage Performance Realty, said in a statement.
“Still, inventory challenges could be a problem for buyers. The lack of supply will continue to put pressure on prices, and we’re already starting to see multiple offers again on well-priced properties. It’s simple low-supply, high-demand math.”
At the same time, the veteran realtor said sellers expecting homes to fetch 2022 prices this year “may need to re-evaluate” their expectations.
“Sellers remain in a ‘wait-and-see’ pattern, holding on to their homes in hopes that supply will increase, or leaving properties on the market at unrealistic price points,” he said. “Last year was an unusual market.”
The report was released the day after the Bank of Canada held its benchmark interest rate steady at 4.5 per cent as the country’s inflation rate fell to 5.2 per cent in February, marking the second month in a row it came in lower than forecast.
The Bank’s decision to not raise interest rates further comes as the economy posts stronger-than-expected growth and the labour market remains exceptionally tight – both signs of a still-hot economy. The bank said it isn’t ruling out the possibility of more rate hikes down the line if inflation ticks up again.
“With enough buyer pressure, Ottawa’s real estate market should perform at typical levels this year, provided interest rates remain stable or increase only slightly from their current position,” Rogan said.
With nearly 160,000 federal public-service workers now in a legal strike position, Rogan also noted that a prolonged work stoppage could dampen sales activity in the capital.
The Ottawa Real Estate Board said its members sold 40 per cent fewer homes last month than in March 2022, with average prices of freehold-class homes falling 17 per cent year-over-year and average condo prices declining 13 per cent.