A renewed sense of confidence within the civil service sector, following last year’s federal election, combined with more affordable housing options throughout Ottawa and the surrounding areas, have contributed to an upswing in residential resale home buying activity in the second quarter of 2016.
Close to 6,850 residential homes sold in the first half of 2016 in the nation’s capital, up almost six per cent over the same period last year (6,836 vs. 6,478). The year-to-date average price for residential properties softened slightly to $392,717, down just over one per cent from $397,846 in 2015. Stronger sales and fewer listings coming onto the market are reducing the inventory of active listings in the residential category.
“Momentum is beginning to build in the residential resale market, particularly under the $500,000 price point,” says Jeff Hooper, a Broker and Partner at our Brokerage. “Almost half of all residential sales have occurred in the price range between $300,000 and $450,000 -- demonstrating how affordable housing is in Ottawa compared to other major Canadian cities. Should this trend of stronger sales and shrinking inventory continue, Ottawa’s balanced market could transition into seller’s territory in coming months.”
Hooper says key neighbourhoods in the city are already experiencing stronger demand than others. The greatest increases in activity to date include traditional hot pocket areas such as the Glebe and Westboro. Neighbourhoods close to future LRT stations have also seen a solid uptick in demand, most notably Hintonburg/Ottawa West in the west end and Overbrook/Carson Grove in the city’s east end. Department of National Defence (DND) and Royal Canadian Mounted Police (RCMP) staff moves to the west end are bolstering home buying activity in Kanata, Barrhaven, and Stittsville. The growing gap between the price of new construction and resale prices has also served to shore up demand for resale homes -- given the difference can be high as $100,000 for similar style of home in some communities.
“While the upswing in sales has yet to impact the average sale price, the decrease in supply is expected to place upward pressure on housing values within the next six to 12 months,” explains Hooper. “The news will be well-received by existing homeowners who have had to contend with flat line pricing in Ottawa and the surrounding areas in recent years.”
While condominium sales also increased in the first half of 2016, this segment of the market remains lacklustre in large part due to an oversupply of inventory. Despite the current decline in supply (as owners rented their properties or took them off the market), the completion of a number of new high-rise condominium developments in coming months will add to the already significant level of stock. Year-to date condominium sales in Ottawa are up close to five per cent over the same period in 2015 (1,448 units vs. 1,381).