The real estate company says the aggregate price in Ottawa will rise to $739,602 by the end of next year, up from an estimated $725,100 this year.
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Royal LePage is forecasting the aggregate price of a home in Ottawa will rise by two per cent by the fourth quarter of 2023, bucking its national prediction that prices in Canada will drop by one per cent in the same period.
The real estate company says the aggregate price in Ottawa will rise to $739,602 by the end of next year, up from an estimated $725,100 this year.
Royal LePage says declining sales in the second half of 2022 reflect a cooling off of the market that’s expected to continue at the beginning of the new year before activity starts to pick up.
Its calculations show the median price of a single-family detached property in the capital will rise by one per cent to $850,117 and condominium prices will increase two per cent to $378,114 by the end of next year.
“We are anticipating moderate home price growth in the Ottawa market by the end of 2023,” John Rogan, broker of record at Royal LePage Performance Realty, said in a statement.
“Condominiums will likely see greater price appreciation than other property types, including in the single-family detached segment, as higher borrowing costs will continue to limit buyers’ purchasing power and push them to the lower end of the market.”
The report comes after the Ottawa Real Estate Board reported last week that home sales dropped 42 per cent in November compared with a year earlier as prospective buyers sit back and wait to see whether interest rates will keep rising.
The high-water mark for home prices in Ottawa came in March, OREB said, the same month the Bank of Canada began a string of six consecutive rate hikes in its bid to rein in soaring inflation.
Since then, average residential home prices have fallen nearly 19 per cent and condo prices have dropped more than nine per cent.
Rogan said prices could start to rise again if the central bank halts further rate hikes and home shoppers who’ve been holding off on buying jump back into the market.
“If interest rates stop increasing, or even decline next year, we could see a spike in home prices and a resurgence of buyer demand from those who have been waiting on the sidelines,” he explained.
“However, sales would increase gradually, as depleted inventory levels are unlikely to be replenished quickly enough to keep up with renewed purchaser demand.”
Royal LePage is the second major real estate firm to predict a small gain in home prices next year for Ottawa.
Last month, Re/Max said it expects average prices in the city will rise four per cent in 2023 as first-time buyers continue to drive demand.
In its report released Tuesday, Royal LePage is projecting the aggregate price of a home in Canada will drop by one per cent to $765,171 by the fourth quarter of 2023.
The company says it expects prices to flatten in the second quarter and then modestly increase in the second half of the year, ending 2023 on an upward trajectory.
Its calculations show the median price of a single-family detached property will fall by two per cent to $781,256 and condominiums will slide one per cent to $568,933 by the end of next year.
Royal LePage attributes its predictions to declining affordability, which has been exacerbated by rising interest rates, and continued housing supply shortages, which are acting like a floor on home price declines.
“After nearly two years of record price appreciation, fueled by a steep climb in household savings, very low borrowing costs and an overwhelming desire for more space during the COVID-19 pandemic, the frenzied housing market overshot and the inevitable downward slide or market correction began, intensified by rapidly rising borrowing rates,” the company’s president and CEO, Phil Soper, said in a statement.
Royal LePage foresees homes in Vancouver remaining the most expensive in 2023, dipping only one per cent next year to more than $1.2 million. Regina will be the most affordable of the places it studied as aggregate home prices are expected to fall 1.5 per cent to $361,495 by the end of 2023.
The Canadian Real Estate Association previously forecast home prices will increase 0.2 per cent in 2023 to $721,814.
– With additional reporting from the Canadian Press
