Ottawa home prices to increase $33,900 by end of 2024, report says

Home prices in Ottawa are expected to increase more than four per cent by the end of the year due to the anticipated drop in interest rates and buyers and sellers returning to the market, according to a new report.

Royal LePage released its House Price Survey on Friday, saying the aggregate price of a new home in Ottawa will increase nearly $34,000 to $788,662 in the fourth quarter compared to the fourth quarter of 2023.

The aggregate price of a home in Ottawa increased 4.4 per cent year over year to $757,700 in the first quarter. Royal LePage said the aggregate price of a new home was $754,700 in the fourth quarter last year.

"The Ottawa housing market has seen a positive start to the year, with an uptick in activity persisting as we enter the spring market. With an anticipated drop in interest rates expected this year, buyers and sellers are regaining confidence and are beginning to come off the sidelines," Jason Ralph, broker of record with Royal LePage Team Realty, said in a statement.

"With this boost in market activity, we have begun to see more multiple-offer scenarios taking place, less so in comparison to the peak of the pandemic, but enough to put upward pressure on housing prices. I expect this momentum will continue into the summer and fall markets."

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The report says the aggregate price of a new home will increase nine per cent across Canada by the fourth quarter of 2024, to an average of $860,555. The Greater Toronto Area will see a 10 per cent hike in housing prices this year, while the aggregate price of a new home will spike 8.5 per cent in Montreal.

Royal LePage said in its report that there is still "not enough supply" to meet demand in Ottawa.

"Demand for all housing types continues to outpace available supply in Ottawa," Ralph said.

"While we are seeing more product become available, we are still lacking enough inventory to satisfy demand, especially as buyer activity ramps up. I expect more sellers will be willing to list their homes if we see interest rates decrease in the coming months."

The report says new developments will help alleviate inventory pressures and new build transactions will pick up this year. Ralph says anticipated interest rate cuts will help boost the market.

"Looking ahead, I expect interest rate cuts will spur market activity further in Ottawa as more buyers and sellers jump back into the market," Ralph said.

"I believe we will see a robust spring market followed by even stronger summer and fall seasons, where we will really begin to see the benefits of lowered lending rates."

The Bank of Canada held its key interest rate at 5 per cent this week, but signalled rate cuts are getting closer.