Strong demand and a limited supply of properties in certain neighbourhoods kept the capital’s housing market stoked following a stellar 2018. Healthy local job growth, low unemployment, major development projects, and low interest rates continue to bolster the real estate market.
There are secondary benefits. When consumers buy a new house or condo, they often buy furniture, appliances, and home décor items, and invest in consulting services, updates, and landscaping, all of which create extra jobs. Homebuyers help drive consumer confidence indicators, which is great news for Ottawa’s economy. Our active housing market helped take the edge off a long winter, and looks set to remain steady into the spring (which is welcome at any time, Mother Nature).
For anyone looking to buy or sell property, a look back at average home prices and interest rates over the last decade is instructive.
At the end of 2008, the average price of a residential property was $310,823. By year-end 2018, the average residential price was $446,661—a respectable 43.7 per cent increase. The average condo price at the end of 2008 was $212,730; by December 31, 2018, this figure had gone up to $278,316—a 30.8 per cent increase. Both average price increases exceeded the rate of inflation.
At year-end 2008, the Bank of Canada (BoC) overnight rate was at 1.00 per cent, partially as a result of the global financial crisis that had reached its peak in September 2008. Eleven years on, as of March 6, 2019, the BoC overnight rate remains low, at 1.75 per cent. This is an attractive interest rate for Canada’s consumers, especially in comparison to the BoC overnight rate in January 2000, when it was set at 4.74 per cent.
Turning to mortgage rates, the average five-year mortgage interest rate was 6.87 per cent in 2008 versus 7.5 per cent in January 2000. In 2018, the average five-year mortgage rate was 5.2 per cent, which is still very reasonable.
Given these factors, along with steady job growth, housing in Ottawa remains affordable compared with other major cities in Canada.