From shusheng's PDF file
OTTAWA
Population growth and a vibrant local economy, characterized by strong employment, migration and income levels, bolstered housing activity in Ottawa throughout much of 2004. By year-end, the number of home sales in the city are projected to rise to 13,000 units, up a modest one per cent over one year earlier. Average price continues to spiral upward, appreciating seven per cent to $235,000 by year-end, an increase of more than $15,000 over 2003 levels.
Ottawa’s population topped one million in 2001 and has grown at a rate of 1.3 per cent annually. The sheer magnitude of the annual population growth is significant enough to impact the demand and supply of housing in the city. In fact, Ottawa has experienced a shortage of all housing types in recent years from affordable rental housing to ownership housing.
Throughout 2004, first-time buyers were extremely active in the market. Many came from rental units, encouraged by lower interest rates and rising prices. A new breed of firsttime buyers emerged in Ottawa this year. Young professionals working in the high-tech, public administration, and diplomatic sectors ? typically less traditional than the average Ottawa resident ? sparked demand for condominium apartments downtown. The recent success of several upmarket apartment and loft-style condominium projects in the Parliament and Byward Market areas of downtown Ottawa suggests the condominium apartment market in the city is evolving.
Inventory levels, which had been tight during the early part of the year, shifted toward more normal quantities. By October, listings had crested over 20,000. Although the selection of homes vastly improved, particularly in suburban areas, several hot pockets continued to experience heated demand. In fact, older, established neighbourhoods, such as Glebe and Sandy Hill, reported a shortage of available listings and more than their share of multiple offers. As prices rose in these upscale communities, buyers expanded their search to neighbouring Westborough and Hintonburg where prices were more affordable for similar, architecturally-unique product.
With solid fundamentals in place, the residential real estate market is expected to experience healthy, but more moderate, growth in 2005. Unit sales activity is forecast to remain on par with 2004 levels while a price increase of six per cent will bring the year-end 2005 average to $249,000.
Given Ottawa’s higher than average annual household income and stable employment base, the majority of consumers in the city are easily able to afford low-density living. As such, anticipated one or two per cent increase in mortgage rates will have little impact on the market next year.
First-time buyers between 25 to 35 years of age will continue to fuel market activity, albeit at a slower pace. Some purchasers, concerned about rising interest rates, may jump into the market early in the new year. As more listings come on-stream, equity gains will slow to more modest levels. However, if listings do not keep pace with demand, the market may be in for another year of double digit price increases.
Condominiums are expected to remain a force in the real estate market in 2005, representing approximately 20 per cent of all residential sales. Higher-end, luxury condominiums, priced in excess of $450,000, will be especially popular with baby boomers and empty nesters. At least five or six luxury condominium projects are slated for completion in 2005 and beyond.
The upper-end of the market may see some softening as a result of increased supply next year. This segment of the market was particularly strong during 2004, with sales of homes priced over $500,000 up approximately 50 per cent over the previous year.
* Source for all charts: CREA, TREB, RE/MAX & N. BARRY LYON CONSULTANTS LTD.
November 2004
