Home sales in the capital plummeted more than 20 per cent last month compared with the previous year, the Ottawa Real Estate Board said Wednesday, prompting the board to suggest that rising interest rates, mounting “buyer frustration” and other factors could be pushing more would-be purchasers toward a “wait-and-see approach” to the market.
A total of 1,889 residential properties changed hands in April, a 21 per cent decline from a year earlier and just above the five-year average of 1,849. That’s a marked change from recent history, when transaction volumes soared well above historic rates and bidding wars for properties were common.
“With the number of transactions just slightly over the five-year average, this was one of the weakest performing Aprils we have seen in a while,” OREB president Penny Torontow said in a statement.
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While prices continue to rise, there are signs the market might be moderating somewhat as available listings gradually increase.
The average residential-class property resold for just under $830,000 in April, up 12 per cent from the same month in 2021. The average condo, meanwhile, fetched a resale price of about $474,000, an 11 per cent hike from a year ago.
That compares with year-over-year price increases of close to 20 per cent in the first few months of 2022.
With the Bank of Canada recently hiking its key interest rate by a half a percentage point and signalling that more increases are on the way, Torontow said the rising cost of borrowing could be among several reasons why more home shoppers are hanging back.
“Certainly, there are a few factors at play: rising interest rates, growing buyer frustration, April’s cooler temperatures, as well as the housing supply measures recently announced by the government – these could all be causing buyers to pull back with a wait-and-see approach,” she said in a statement.
“We are watching the rest of the spring market closely to determine if this could perhaps be an early indicator of a shift in the market. Since April is only one month, we will be monitoring to see if it becomes a trend moving forward.”
As the market cools off, Ottawa’s stock of available inventory is slowly replenishing.
More than 2,800 new listings appeared in April, down 11 per cent from a year earlier but still well above the five-year average of 2,600. The city now has just under one month’s worth of inventory, compared with about two weeks of available resale housing stock in March.
