CMHC: Low-rise dwellings to drive 2014 Ottawa new housing market

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Ottawa Construction News staff writer

Ottawa’s new housing construction next year will be driven by low-rise dwellings, says Sandra Perez Torres, Canada Mortgage and Housing Corp.’s (CMHC) senior market analyst for Ottawa.  Meanwhile, her colleague Anne-Marie Shaker told the annual CMHC Housing Outlook Conference on Nov. 7 that starts for most sub-markets in the Ottawa area will scale back from 2013 levels, and prices will mostly grow in line with inflation.

“Ottawa’s resale market will remain balanced while new construction will temper in 2014, as current apartment inventory gets absorbed,” said Perez Torres. “Employment growth will support the housing market, benefiting numerous multimillion-dollar projects, including the LRT that will sustain the city’s growth.

“In the long-run, Ottawa’s housing demand will be led by echo and baby boomer’s preferences towards smaller dwellings,” she said.  “The other big influence in Ottawa housing demand, migration, will remain healthy, with some immigrant groups increasing their share of ownership demand as their income mimics Ottawa’s average income.”

Shaker reported that the number of new starts in the southern suburbs will decline to slightly more than 1,000 from previous levels of upwards of 2,500 in the past few years, a significant decline, but reflecting a “rebalancing” with the area’s population.  She said row houses will cushion a decline in multiple housing unit construction there.

Meanwhile, construction in the eastern areas (Orleans and Vanier) will continue to moderate, reflecting a significantly reduced market share.  Western neighbourhoods such as Kanata, will see rising share in total starts, with higher prices and the highest income among sub-markets.  Rental housing will continue to dominate in the central area, she said.

Other housing conference highlights included:

  • Ottawa’s diversified structure will provide stability as public administration employment returns to pre-recession levels;
  • Resale price increase moderation will be influenced by preferences towards more affordable dwellings, as income will be growing at a slower pace;
  • Demographic, income and specific characteristics by submarket will create different opportunities, making housing market activity in some of these submarkets buck the general trend.

Province-wide, housing activity “will slow in 2013 then stabilize by 2014, thanks in large part to an improving Ontario economy, lower inventories of unsold home and less out-migration to other provinces,” said Ted Tsiakopoulos, CMHC’s Ontario regional economist.  “Tight resale market conditions for single detached homes, active repeat buyers and improving income growth will allow demand for lower density homes to hold up better for most of 2014.”

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