Low inventory levels and a last-minute rush to beat tougher Canadian mortgage rules helped push the average price of a home in Ottawa to $442,533 in the final quarter of 2017, Royal LePage said Wednesday.
The real estate firm’s latest house price survey said the average price of a home was up 6.8 per cent, year over year – four percentage points below the national average.
New mortgage rules came into effect at the start of this year that require would-be borrowers to show they can withstand a hike in interest rates.
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John Rogan, the broker of record at Royal LePage Performance Realty, said in a statement that this pushed more buyers to enter the market at the end of 2017 to get ahead of the new requirements, placing upward pressure on prices.
Additionally, Ottawa is facing a “shortage” of homes for sale, Rogan said. While he said the capital’s real estate market remains more balanced than other major Canadian urban markets, the imbalance between supply and demand is pushing up home prices.
Looking ahead, Rogan said one of the big questions for 2018 is whether the current low inventory levels of homes for sale will persist, particularly in the condo market.
He said condo sales have “surged,” an observation also recorded by the Ottawa Real Estate Board in the second half of the 2017. Rogan said the relative affordability of condos is attracting many first-time homebuyers.
At the same time, an oversupply of unsold condos several years ago prompted some homebuilders to switch development plans to purpose-built rental units.
“It will be interesting to see if new (condo) construction supply will rise to meet growing demand in the segment,” Rogan stated.
Nationally, Royal LePage said Canada’s residential real estate market saw strong, but slowing year-over-year price growth in the fourth quarter of 2017.
The real estate company says based on data in 53 markets, the price of a home in Canada increased 10.8 per cent year-over-year to $626,042 in the quarter.
Broken down housing type, Royal LePage says the median price of a two-storey home rose 11.1 per cent year-over-year to $741,924, and the median price of a bungalow climbed 7.1 per cent to $522,963.
But the company said the median price of a condo grew faster than any other housing type studied, rising 14.3 per cent to $420,823 on a year-over-year basis due to gains in many of the largest markets.
In the Greater Toronto Area, the median price of a condo grew 19.5 per cent year-over-year to $476,421, while in the City of Toronto, the cost of a condo rose 19.6 per cent to $515,578.
In Greater Vancouver, condominiums followed a similar pattern during the quarter, rising 20.2 per cent to $651,885, while the median price of a condo unit in the City of Vancouver rose 18.7 per cent to $775,806.
Royal LePage also says the GTA showed signs of slowing as 2017 drew to a close, notably in the single-family detached segment.
In the fourth quarter, the median price of a two-storey home and bungalow in Toronto and surrounding area fell by 2.0 and 2.4 per cent respectively on a quarter-over-quarter basis.
The company says condos were the only segment to appreciate on a quarter-over-quarter basis among all housing types, rising 1.1 per cent in the final three months of the year.
At the same time, the price of two-storey homes and bungalows fell 0.3 and 0.2 per cent quarter-over-quarter, respectively.
“To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability,” said Royal LePage president and CEO Phil Soper.
“This is especially true for first-time buyers whose purchasing power has been reduced by tightening mortgage regulations.”
– With reporting by the Canadian Press