The April 2022 new-home sales numbers suggest a shift is happening in the Ottawa market.
At a time of year when the market typically heats up for spring, new-home sales in April were down more than 40 per cent from the previous year and from the previous month, according to the latest report prepared by PMA Brethour Realty Group on behalf of the Greater Ottawa Home Builders’ Association.
There were 284 new-home sales in April, down 43 per cent compared to the 500 homes sold in April 2021 and well below the five-year average of 414. Sales this April were also down 44 per cent from March, which saw 511 sales. That followed on the heels of March sales that were 22 per cent lower than February.
“Although in these early months of 2022 it might seem that the market is spiralling downward, the Ottawa market is on a path to market stabilization after years of heightened demand, frantic buying, small and fewer new product releases, sold out sites, and substantial and frequent price increases,” says PMA’s Ottawa president, Cheryl Rice.
“Higher interest rates, accelerating inflation rates that exceed average wage increases, the government’s new recent housing measures, and other contributing factors have ultimately led buyers to sideline their major purchase decisions. For now, many consumers are more comfortable just treading water.”
We’re seeing a similar, if less dramatic, drop in sales in the resale market, with April sales falling 21 per cent in April compared to the year before.
The numbers related to new-home inventory are also telling.
Demand for new homes is down, with only 45 per cent of homes released for sale in April sold within the same month, Rice notes. That compares to an absorption rate of 70 per cent in April 2021. The demand for townhomes, in particular, is down with an absorption rate of only 38 per cent, compared to 77 per cent at this time last year, she says.
‘Fear of overpaying’
“New-home inventory, often a contributor to lower sales, is up right now by 10 per cent month-over-month and 29 per cent year-over-year. Removing inventory as a factor, what’s slowing buyers down are interest rate changes, inflationary pressures, and fear of overpaying for a home at today’s higher prices.”
In terms of market share, even the usual frontrunners saw a significant drop in sales, with only Caivan maintaining its sales consistency for the month, thanks in large part to new releases at its Barrhaven projects, The Ridge and The Conservancy.
In fact, Barrhaven and other south-end developments grabbed the lion’s share of the market by area at 64 per cent, edging up the south end’s dominance in sales lately.
Although sales in the past couple months are on a downward trajectory, for the year to date they are still on par with the same period last year — 2,031 this year versus 2,009 last year.
“Ottawa has and will continue to be protected from a major market adjustment, thanks to its booming technology sector and strong public service sector, white-collar jobs, high employment rate, attractive amenities and appealing lifestyle,” says Rice.
