Photo: Steve Slaby/Flickr
Ottawa has dethroned Vancouver to become the hottest Canadian housing market on a regular quarterly ranking of 150 international cities.
In the fourth quarter of 2018, Ottawa home prices increased 5.9 percent compared to where they stood during the same period the year before, placing the city in the 45th slot on consultancy Knight Frank’s Global Residential Cities Index.
Vancouver ranked 104th, with prices increasing 1.4 percent in 12 months. That’s a sharp fall from the third quarter, when Vancouver was 49th and posted annual price gains of 6.2 percent.
Ottawa hasn’t outperformed Vancouver for price growth since the second quarter of 2013, Knight Frank confirms.
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However, Vancouver’s drop is part of a broader global cooldown. Knight Frank says that in 2018, 79 percent of the cities the index tracks recorded price gains, compared to 87 percent in 2017.
“With geopolitical issues clouding the world stage, and the era of cheap finance coming to a close, we expect the index’s performance to weaken further in 2019, although the Federal Reserve’s decision to halt rate rises in 2019 may soften the blow for a number of emerging markets,” writes Kate Everett-Allen, Knight Frank’s head of international research.
The Bank of Canada appears to be falling in line, and many are expecting the central bank to stand on the sidelines this year.
Observers last year had called for the Bank of Canada to continue hiking its policy rate, which influences the mortgage market, but amid a weaker-than-expected economy many expect it will maintain the rate at a still-low 1.75 percent.
Recent price gains are no mystery to the Ottawa Real Estate Board. “With high demand and limited supply, prices will continue to be pushed upwards – it’s a simple and fundamental economic principle,” writes Dwight Delahunt, the board’s president, alongside the release of March home-sales data.
According to the release, a lack of supply is driving rapid sales, and prices are reflecting this. In March, the average price of a residential property in Ottawa was $480,143, up 7.2 per cent on a year-over-year basis.
Knight Frank’s Everett-Allen agrees limited supply is lifting prices, citing two additional factors.
“Population growth, high employment and limited supply are supporting prices,” Everett-Allen tells Livabl in an email.
On the Knight Frank index, Toronto held 76th spot, recovering from 132nd in the previous quarter in part thanks to price growth of 3.7 percent.
Unlike Toronto and Vancouver, non-residents are not subject to a foreign-homebuyer tax in Ottawa, and that’s one — but not the only — reason why the nation’s capital has pulled ahead.
“Property market regulations in Toronto and Vancouver have influenced market sentiment but it is also mirrors the trend of price moderation that we are seeing across a number of prime cities globally,” Everett-Allen adds in the email to Livabl.
Toronto also trailed the Canadian entries of Hamilton and Montreal, where prices increased about 4.4 percent in each, good enough for the 67th and 68th spots, respectively.
Meantime, Budapest continued on its index-topping tear, with prices surging 23 percent. “The Hungarian capital has been placed within our top ten for the last five consecutive quarters,” Everett-Allen points out.