Here's how much a house in Ottawa is expected to cost in 2023

A for sale sign displays a sold home in a development, in Ottawa, on July 6, 2015. (THE CANADIAN PRESS/Sean Kilpatrick)

Home prices in Ottawa will slightly increase by the end of next year, according to a new forecast.

Royal Lepage’s market survey forecast for 2023 says the aggregate price of a home in Ottawa is expected to rise two per cent year-over-year by the end of 2023, to $739,602.

The report, released Tuesday, predicts a nationwide decline, with home prices expected to end the year one per cent below the fourth quarter of 2022.

“We are anticipating moderate home price growth in the Ottawa market by the end of 2023,” John Rogan, broker at Royal LePage Performance Realty, said in a news release.

“Condominiums will likely see greater price appreciation than other property types, including in the single-family detached segment, as higher borrowing costs will continue to limit buyers’ purchasing power and push them to the lower end of the market.”

In Ottawa, the median price of a single-family detached home is expected to rise one per cent by the end of 2023, to just over $850,000. The median price of a condo property is forecast to increase two per cent to $378,114.

The report notes that home prices in many major markets have been decreasing as the Bank of Canada has aggressively increased interest rates. It expects double-digit year-over-year declines in the first part of next year across Canada; homes will cost 12 per cent less in the first quarter of 2023 than they did a a year earlier.

But those decreases will flatten out, with year-over-year decreases of 7.5 per cent in the second quarter, two per cent in the third quarter and one per cent in the fourth.

Ottawa will be no exception to that trend, the report says, with a soft start to the year but a rally in the second half.

“If interest rates stop increasing, or even decline next year, we could see a spike in home prices and a resurgence of buyer demand from those who have been waiting on the sidelines,” Rogan said.

“However, sales would increase gradually, as depleted inventory levels are unlikely to be replenished quickly enough to keep up with renewed purchaser demand.”

Toronto and Montreal are expected to see two per cent price declines by the end of 2023. Prices in the Greater Vancouver area are expected to dip one per cent.

The Bank of Canada raised its overnight rate last week by 50 basis points to 4.25 per cent, its seventh rate hike in nine months. The last time the bank’s policy rate was this high was in January 2008.