Local home prices rose by a “healthy” amount in the third quarter, even as sales began to taper off, according to Royal LePage.
The real estate services firm said the strength of the local housing market was due at least in part to rising tech sector employment, which offset uncertainty stemming from expected federal government layoffs.
The real estate services firm said Ottawa saw “healthy” year-over-year prices gains in the third quarter:
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– Two-storey dwellings were up 4.9 per cent to $392,167;
– Detached bungalows increased 5.1 per cent to $389,583;
– Standard condominiums rose 6.1 per cent to $261,833.
Without providing specific figures, Royal LePage said there was a modest decrease in market activity in the third quarter, but that a strong first half meant year-to-date transactions are still up over last year.
While residential inventory increased “modestly” over last year, the number of unsold condominiums on the market is up more than 15 per cent, the company said. However, John Rogan, broker and manager of Royal LePage Performance Realty, said that’s not dampening condo prices.
“Despite an increase in inventory, standard condominium prices rose because they are a very popular choice for first-time buyers in the region,” Mr. Rogan said in a statement.
“Another reason for the increase is that empty-nesters looking to downsize are buying higher-end standard units. This would also impact the average price.”
Nationally, Royal LePage said the average price of a home in Canada rose between 1.8 and 4.8 per cent in the third quarter, depending on the category, but the number of homes sold was slipping.
Fewer homes trading hands, the company said, typically precedes a period of softening prices as sellers adjust their expectations and cut prices.
“During the third quarter, unit home sales were positive in July, fell nine per cent year-over-year in August and we are expecting September to show a decline as well,” Royal LePage chief executive Phil Soper said.
“We had predicted this cyclical change early in the year, a natural market reaction after a period of strong expansion. Changes to mortgage regulations, which took effect on July 9, accelerated the correction.”
Among the changes to tighten the lending rules, the federal government cut the maximum amortization period for government insured mortgages to 25 years from 30 years, making monthly payments more expensive, but reducing the amount of interest paid in the long term.
The government also moved to place debt-to-income restrictions and ended government mortgage insurance for homes worth more than $1 million.
It was the federal government’s fourth intervention in the mortgage market in just four years.
Royal LePage said the cost of an average two-storey home in Canada increased four per cent to $403,747, while detached bungalows rose 4.8 per cent to $366,773.
Standard condominiums saw an increase of 1.8 per cent to $243,607, and while most cities experienced modest price appreciation in the quarter, fewer homes were sold compared to the same period in 2011.
-With reports from the Canadian Press