Royal LePage predicts Ottawa home prices to end 2022 up 0.5 per cent

Royal LePage is lowering its forecast for Ottawa's real estate market to end the year as interest rate hikes continue to cool the housing market.

The Royal LePage Market Survey forecast predicts home prices will increase 0.5 per cent in the fourth quarter from 2021. In July, The Royal LePage House Price Survey and Market Forecast predicted home prices would increase 10 per cent in the final quarter.

The aggregate price of a new home will be $743,399 by the end of the year, according to the Royal LePage report. That is a $70,000 decline from the July outlook of $813,670.

"Despite softening home prices over the summer, Ottawa's fall real estate market is trending towards more stable conditions as new inventory becomes available," said Jason Ralph of Royal LePage Team Realty.

"We continue to see strong buyer demand in the region - even if lower than last year's historical highs - and not enough supply to fully shift to a balanced market."

Ralph says that while interest rate hikes and inflation have eased competition, properties in the most desirable neighbourhoods can produce multiple-offer scenarios if priced properly.

"Although demand remains strong in parts of the region, buyers today are able to be more selective with their purchases and have the opportunity to place conditions in their offers," Ralph said. "Those who are in a position to buy feel the pressure to transact before lending rates rise any further."

In the third quarter, the aggregate price for a new home in Ottawa decreased by 7 per cent to $744,500, from $800,300 in the second quarter. Ottawa home prices decreased 1.1 per cent in the second quarter.

In a media release, Ralph said he expects healthy market activity for the remainder of the year and anticipates a shift back to pre-pandemic seasonal trends in 2023, as low supply continues to be a challenge for buyers.