Ottawa housing sales are going to rise over the next few months before slowing down again in mid-2014 due to an expected increase in mortgage rates, the Canada Mortgage and Housing Corp. said in its fall report.
By Jacob Serebrin
Housing sales in 2013 were down 3.4 per cent as of September when compared to the same period a year earlier, the Crown corporation said. Condominium sales were down even more, dropping 4.8 per cent from the previous year.
With consumer confidence increasing and the unemployment rate dropping, the CMHC said it expects demand to firm up into the new year.
Major banks increasing their mortgage rates could “convince some on-the-fence buyers to go ahead with their purchase to take advantage of the relatively lower mortgage rates,” according to the report.
As a result, “sales should be trending a bit higher into the early months of 2014 before scaling back once more as interest rates start inching up by the second half of the year.”
The CMHC also expects its Ottawa West area, which includes the West End, Kanata, Stittsville and Nepean, to continue to grow in popularity. These areas have seen both above-average sales and prices when compared to the rest of the Ottawa area, the report said.
Housing prices are going to rise by 0.6 per cent next year, which is just below the inflation rate. The report said this is being driven by a balanced market, where “neither sellers nor buyers have the upper hand.”
The CMHC also expects construction activity to drop by 15 per cent next year.
Some condominium projects were “put on hold even after breaking ground,” the report said.
Due to the large number of completed but unsold condos and the “record number” of units under construction, the CMHC expects a decrease in apartment construction.
When it comes to rental apartments, the CMHC believes the vacancy rate will increase this year to 3.2 per cent. According to the report this is due to high youth unemployment rates.
But with the job market expected to recover, the CMHC expects that the vacancy rate will drop slightly in 2014.