Luxury market stable in Ottawa: report
Interest rates expected to drop slightly, opening the door for more transactions
For the first time since 2014, two properties sold for more than $6 million in the nation's capital, driving a 24 per cent increase in average prices for homes over $4 million, Engel & Völkers reports.
According to its 2023 Year-end Luxury Real Estate Market Report — which offers insights drawn from data on homes priced from $1 million to $3.99 million and those priced over $4 million in Canada's high-demand metropolitan markets — property prices in Ottawa stabilized, decreasing 15 per cent from the pandemic's market high, but still up by more than 50 per cent from pre-pandemic levels in 2019.
The number of residential units in the $1-million to $3.99-million market that exchanged hands trended downward monthly in the year's second half. In November, for instance, just 54 residential homes valued at $1 million to $3.99 million sold.
That's on par with 2022, when 60 units sold. The number of condo units sold trended upwards from July to year-end, peaking at six units sold in October and November in that price category.
Ottawa's market was previously characterized by buyers and sellers engaging in transactions to pursue gains. But because property prices have stabilized and interest rates have risen, today's buyers and sellers have a specific reason for transacting, such as moving for a job or being closer to family.
Some buyers are waiting until spring, anticipating financial pressure on sellers will allow them to negotiate more favourable prices. Despite that speculation, the luxury segment remains stable, with no panic selling or exceptional deals, Engel & Völkers reports.
Luxury markets in other parts of the country also demonstrated “remarkable stability and resilience” last year.
In Montreal, the number of units valued at $1 million to $3.99 million that exchanged hands dropped 12 per cent annually, but average prices decreased just 0.62 per cent.
Though sales of properties exceeding $1 million dropped 16 per cent in Halifax last year, the average sales price increased 13 per cent year over year.
Vancouver's luxury real estate market “defied flux” and was characterized by “unyielding stability” in $1 million to $3.99 million home price averages. Toronto's ultra-luxury market “thrived,” with 31 homes with price tags of $8 million or higher exchanging hands last year.
Though 17 per cent fewer home sales over $4 million were reported in 2023 compared with 2022 thanks largely to the ban on foreign buyers, the category outperformed pre-pandemic times, with just 15 homes priced over $8 million selling in 2019.
“Looking ahead to 2024, Canada's real estate markets are poised for a dynamic year as buyers and sellers adeptly navigate the evolving conditions,” says Engel & Völkers Americas president and chief executive Anthony Hitt.
He's optimistic the latter half of the year holds promise for sellers.
“The Bank of Canada is expected to marginally reduce interest rates, set to trigger clustered demand, fostering competitive conditions. The good news is after years of precariously low inventory, the past 12 months have seen a build up and it will be there to meet demand.”