Home sales in Ottawa plummeted 33 per cent in September compared with a year earlier as rising interest rates continued to dampen the market, the Ottawa Real Estate Board says.
OREB members sold 1,080 residential properties last month, down from 1,601 in September 2021.
September’s total is 31 per cent below the five-year average of 1,586 transactions for the month. It was the seventh consecutive month that home sales have fallen year-over-year, with monthly declines averaging 20 per cent over that stretch.
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“September’s lower sales performance reflects continued hesitancy among buyers as they watch interest rates rise and consider the speculation surrounding price trends,” Ottawa Real Estate Board president Penny Torontow said in a statement.
“With rising interest rates, the mortgage stress test has sidelined some potential buyers, while others are likely scrutinizing their budgets for affordability amidst inflation and cost of living increases.”
Key rate at 3.25%
The Bank of Canada raised its key interest rate by three-quarters of a percentage point last month, from 2.5 per cent to 3.25 per cent, in its ongoing bid to rein in soaring inflation. Re/Max is now forecasting the average home price in Ottawa will fall two per cent over the rest of the year as rising mortgage rates make borrowing to buy a house more expensive.
OREB’s recent figures back up that assessment.
The average residential-class property sold for $706,658 in September, down from $707,712 in August and up just 0.5 per cent from a year earlier – in stark contrast to the double-digit price gains seen at the beginning of 2022.
The average sale price of a condominium was $450,987 last month, up six per cent from September 2021 and an increase of nearly seven per cent from August’s average price of $421,966.
Year-to-date, residential sale prices are averaging $788,535, while condos are selling for an average of $457,189. Both prices are up nine per cent compared with the first nine months of 2021.
“Prices are stabilizing with slight month-to-month movement, whereas year over year we are seeing the slow and steady increases that the Ottawa resale market is known for,” Torontow said.
Meanwhile, Ottawa’s housing inventory continues to grow as the market cools off.
OREB said there is now about a three-month supply of residential-class housing, up from 1.2 months a year ago. The inventory of condos for sale has also jumped, from 1.6 months of supply in 2021 to 2.7 months today.
There were 2,371 new listings last month, an increase of five per cent from 2021.
“This trend continues to bring the resale market into more balance, which generally means more time for buyers and sellers to weigh their options and to adjust according to their needs,” Torontow said.