Some key projections to consider this year:
-The Ottawa real estate market will balance out with inventory set to increase.
- Interest Rates will rise between 1% - 1.5%.
- The Rental market will continue to be strong and limited.
- Average Home prices will possibly increase by around 1.5%.
This past year has been quite the ride for the Ottawa Real Estate market. We have seen a very big switch from a buyers’ market to a very strong sellers’ market. We saw multiple mortgage rule changes throughout Canada (e.g. the mortgage stress test) and hikes in Mortgage rates which affected most of Canada. In Ottawa it caused the opposite affect and one reason was because we saw a lot of buyers come from Toronto, GTA, Vancouver, etc. The main reason is because Ottawa is still a very affordable city compared to most of the other major cities in Canada. Ottawa is in a growth stage right now, capturing the attention of investors and regular homebuyers.
A lot of Real Estate associations in Canada are calling for a slower market in general for Canada in 2019. That is mainly due to the increase in interest rates and the greater difficulty of mortgage approvals. The reason the mortgage rules and hikes are in place is to cool the market and bring it to a more balanced buyer/seller market, and it is showing some signs that it is working.
More Options for Buyers in 2019
We are in for a more balanced real estate market here in Ottawa for 2019. I predict that we will see interest rates hikes of at least 1% to 1.5% coming from the Bank of Canada. The inventory in Ottawa will grow drastically, as we had a lot of sellers waiting to see how the market plays out before listing their home. I believe that sellers will now start listing more and more this year which will increase supply and hopefully balance the market to make it easier for buyers looking to purchase a home in Ottawa. The amount of mortgages issued will go down as they increase rates and keep changing the rules to be qualified for a mortgage.
What about the Rental Market?
Rental prices in Ottawa have increased drastically this year due to the lack of supply of rental homes. This makes it harder for renters to find a home, let alone an affordable one. People and Investors who do buy a rental property are having to pay more for said property because prices are higher overall. This means their monthly costs have increased which is then reflected in their rental price in order to cover the monthly costs for the home. It is being projected that rentals prices will increase by about 9% in 2019. I expect the increase to it be closer to around 6% as they are already very high right now.
Average Home prices to increase but only slightly
Overall average home prices will rise but only by a slight amount. We will get into a more balanced market with sellers having more competition, which will affect how people price their homes. We are looking at average increase of about 1.5% to 2% appreciation.
We are lucky to be in a growing city like Ottawa which has always had a pretty steady and predictable market. The city is now going through what is called a Renewal Phase which means that the city is getting popular again, it's seeing more new construction, including retail and commercial properties, an increase in property renovations, and new transit options in an already established city.
What do you think is store for Ottawa Real Estate Market in 2019? I would love to hear your thoughts and questions!
Sorin Vaduva - Ottawa Realtor, Investor and Small Business Owner
Sorin@capitalrealestate.ca - 613-262-9562
