Ottawa’s May 2023 resale market was firmly back in sellers’ territory with brisk sales and growing potential for price increases, according to the Ottawa Real Estate Board.
Realtors sold 1,939 residential properties last month through the board’s Multiple Listing Service (MLS), compared with 1,830 in May 2022. That six per cent jump was the first month-over-month increase since February 2022, when the resale market started tightening after a wild selling spree throughout the pandemic.
Last month’s total sales were also very close to May’s five-year average of 1,961, the first time in a long time the local market has come within striking distance of the five-year average.
May’s sales included 1,477 non-condo properties, up eight per cent from a year ago, and 462 condominiums, a one per cent increase from May 2022.
“Typically the highest-selling month, May’s transactions did not disappoint,” said board president Ken Dekker in a statement. “It is a promising year for sellers barring any interest rate adjustments, as we saw a correlated drop in sales every time there was an interest rate hike in 2022.”
That interest rate increase — the first in four months — has happened with the Bank of Canada raising its overnight rate 25 basis points to 4.75 per cent on June 7. The bank was reacting to the country’s recent strong economic performance, vibrant housing market and strong consumer spending, all of which helped to accelerate inflation in April.
While the Canadian Real Estate Association has not yet released numbers for May, its April statement reported demand outstripping supply as sales surged and buyers re-entered the market after months of sitting on the sidelines.
Shrinking inventory could presage price growth
Inventory for both non-condo and condo properties stood at five to six weeks in Ottawa’s May 2023 resale market. While that’s up from this time last year, it’s also lower than last month. It’s been accompanied by a further reduction in days on market, from 27 to 23 for non-condo properties and 33 to 26 for condominiums, another sign of a sellers’ market.
Shrinking inventory means “we are in a strong sellers’ market,” said Dekker. “With the pent-up high demand and sales volume increasing, we are likely to see upward pressure on prices as demand continues to outstrip supply.”
The average sale price for a non-condo property in May was $745,902, a drop of seven per cent from 2022 but still on par with April 2023 prices.
Condominiums sold for an average of $442,859, down six per cent from a year ago but two per cent higher than last month.
Year-to-date, non-condo properties have averaged $727,728 and condominiums have been $428,394, decreases of 12 and nine per cent respectively.
Decker said that although we are not yet seeing steep price escalations, he expects mounting demand and Ottawa’s “chronically undersupplied” resale market mean the average month-over-month sale price will surpass last year’s figures in the latter half of 2023 — “provided we do not see interest rate hikes.”
This article was originally published June 6, 2023 and has been updated to reflect the increase in the Bank of Canada’s overnight rate on June 7.
