What happened in 2017
You could be forgiven if you’ve paid no mind to Ottawa’s real estate market as the action in Toronto and Vancouver has stolen the headlines.
But those in the know are already seeing Canada’s capital as a market to watch in 2018 and beyond.
Bank of Montreal Senior Economist Robert Kavcic wrote the Ottawa real estate market was “about to break out” last July and, according to recent statistics from the Ottawa Real Estate Board, the market – long known as a conservative one buoyed by steady government employment and a reliable economy – has done just that.
“Fundamentally, things are playing out pretty well as we would expect,” Mr. Kavcic says. Ottawa’s real estate market is one of Canada’s strongest and steadiest.
There were 17,803 homes sold in Ottawa in 2017, an increase of 10 per cent over 2016. The condo market had a 22-per-cent increase in sales year over year.
The average condo price in Ottawa in 2017 was just more than $269,000, which was an increase of 3.4 per cent over 2016. However, compare that with the GTA’s average condo price of $512,478 – essentially double – and there’s an opportunity for young buyers to get into the market in Ottawa.
The tight rental market
The Ottawa vacancy rate is currently 1.7 per cent – is also nudging people into purchasing homes.
“We’re seeing millennials come in to the market, rather than renting,” Ottawa Real Estate Board president Ralph Shaw says. “Our rental market is so tight, so the young people are picking up the smaller, affordable condos.”
Mr. Shaw points to the federal government as a steady employer helping to keep the market strong. Ottawa’s technology industry is also booming; online retailing software developer Shopify, with a $15.4-billion valuation, recently announced plans to triple the size of its Ottawa headquarters.
“[The market] has a lot of stability with the federal government. They do go in waves but they’re a pretty stable employer. The technology companies right now are strong. The construction industry is strong,” Mr. Shaw says. “All the main driving forces are active right now.”
Affordability has certainly propelled the market – almost 10,000 of the residential units sold in 2017 in Ottawa were less than $500,000 (Canadian). Ottawa’s luxury market is also booming.
Of all the homes sold in Ottawa last year, 257 were valued at more than $1-million, versus 155 in 2016. Meanwhile, 25 condos were sold more than $1-million versus just nine in 2016, according to the OREB.
Between condos and townhomes, affordable detached homes, or luxury properties in Ottawa’s can’t-miss neighbourhoods such as Rockcliffe Park, the Glebe, or Westboro, the appetite for homes has been a boon on the capital’s construction industry as well.
Developers launched more than 7,400 housing projects in 2017, the highest number in more than a decade according to the Canada and Mortgage and Housing Corp., marking a 41-per-cent increase from the year before.
“[The condo] inventory [has been] growing dramatically the last few years. There was a slow down but there’s been a strong recovery in the last 18 months … 12 months in particular. There’s a bit of social engineering going on with the light rail. Municipal government is encouraging high density, making it a priority,” Mr. Shaw says. “That’s an incentive for builders to take on those projects.”
The new light rail project
The Confederation Line, will connect Blair Station in Ottawa’s east end to Tunney’s Pasture near the trendy Westboro neighbourhood, with an underground tunnel through Ottawa’s downtown core.
Construction has continued for the past five years and the project is set to come online later this summer. The impact the LRT system will have on the housing market is already palpable, according to Mr. Shaw.
“Each community has a chance to do something different. The light rail is going to change some dynamics if you’re looking longer term,” he says. “The light rail is going to dramatically affect [some neighbourhoods].”
According to Mr. Kavcic, Ottawa’s real estate market is showing no signs of slowing down. While he wrote it was primed to ‘break out’ in 2017, it will grow further still in 2018.
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