In its fall market outlook released Tuesday, Re/Max Canada says it expects the average sale price of a home in Ottawa to increase to $680,740 by the end of 2024, up one per cent from the end of July.
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A new report predicts Ottawa home prices will rise slightly over the rest of the year as falling interest rates prompt sidelined buyers to re-enter the market.
In its fall market outlook released Tuesday, Re/Max Canada says it expects the average sale price of a home in Ottawa to increase to $680,740 by the end of 2024, up one per cent from the end of July.
Re/Max says overall sales activity is expected to accelerate over the last few months of the year in response to the Bank of Canada’s recent move to begin cutting interest rates. The central bank’s next rate announcement is scheduled for Wednesday.
“If the interest rate is cut again, as is widely anticipated, sellers could be more inclined to enter the market under the assumption that sidelined buyers will re-enter the market as well,” the company said.
“Affordability challenges continue to impact buyer activity and interest rate cuts are more impactful on current owners in Ottawa than potential buyers. As a result, move-up and move-over buyers are coming back to the market due to interest rate cuts – especially those who purchased before 2021 and have built equity, and have fewer concerns around mortgages.”
The average price of a residential property in Ottawa was $674,000 in July, a bump of 0.9 per cent over the average sale price for the first six months of 2023, Re/Max said. Overall sales for the first half of 2024 rose 6.6 per cent to 7,238, while total listings jumped 18.9 per cent to 13,633.
The real estate company said the Ottawa housing market is currently experiencing “balanced conditions,” adding inventory levels are expected to be “adequate” to meet buyer demand for homes within the average and higher-priced ranges.
However, Re/Max said the supply of lower-priced homes remains “limited.”
The company attributed the housing shortage to construction delays caused by labour shortages and rising material costs as well as other factors such as single-family homes “stagnating on the market because of the price” and buyers “leaning toward resale rather than newly built homes, which often call for additional upgrade costs.”
According to a Re/Max survey that accompanied the report, one-quarter of Canadians are “actively saving for a home purchase and confident they will be able to buy soon.”
On the flip side, 14 per cent of respondents said they need to renew their mortgage soon and may need to sell their home as a result of interest rate hikes since they previously negotiated financing.
Nearly two in 10 respondents, or 16 per cent, said they will feel more comfortable shopping for homes once they see there is more than a one percentage point reduction in the Bank of Canada’s lending rate between now and the end of the year.
So far this year, the central bank has cut its key rate by half a percentage point to 4.5 per cent. Economists widely expect the bank to cut the rate by another quarter of a percentage point on Wednesday.
“The fall market is usually a good early indicator for activity as we look ahead to early 2025, and we’re headed toward more healthy territory,” Re/Max Canada president Christopher Alexander said in a news release on Tuesday. “With interest rates starting to ease, buyers are beginning to come off the sidelines.”
However, Alexander said it will likely take additional rate cuts for the market to return to “full swing” by historic standards.
“Consumers will drive that trend, so we'll need to see a bigger move by the Bank of Canada for that to happen,” he said.
“Despite some consumer confidence starting to return to the market this season, the reality is Canadians are still grappling with some serious housing affordability challenges rooted in lack of supply. Yes, borrowing is becoming less expensive, but this won't make housing affordable in the long run. Markets ebb and flow, and as buyers re-enter the market and absorb inventory, we'll see more upward pressure on price.”
The online survey of 1,530 Canadians was done by Leger between Aug. 9 and 11, with a margin of error of +/- 2.5 per cent, 19 times out of 20.
