The Merit condominiums, scheduled for completion in 2014, is one of many new buildings that will likely be affected by dipping prices.
The Ottawa condo market saw a drop in prices in 2013 due to a “supply overflow,” according to a new report by Royal LePage Realty.
The average condo price in Ottawa declined about two per cent to $260,500 in 2013.
Randy Oickle, president of the Ottawa Real Estate Board, says Centretown was hit hard.
While the decrease in the Ottawa area was only about two per cent, condos in Centretown alone dropped about 6.5 per cent, Oickle says.
“It’s because of the number of new condo developments that have come up outside of Centretown,” he says, “so buyers just have a wider range of choice.”
Oickle says areas such as Westboro and Old Ottawa South are becoming more popular in the condo scene.
“I think what we’re seeing in Ottawa is what’s happened in other major metropolitan cities, where condo development starts very often in the core of the city and then starts to spread out from there,” he says.
The “supply overflow” outlined in the Royal LePage report is consistent with Centretown numbers, with almost 300 condo units for sale right now in the area, according to Angie Zarysky, a real estate agent with Royal LePage.
Last year, 438 units were sold in all of Ottawa.
About 145 of those were sold in December alone, meaning the year started discouragingly but finished relatively well.
Zarysky says this disparity is partially due to new regulations on mortgages that came into place in recent years.
“We used to be able to buy a 20-year mortgage – you can’t now. You used to be able to have zero down – you now need five per cent,” she says.
These changes were part of a series of new regulations put in place since 2008 by the federal government, which was concerned about rising personal debt.
In June 2012, the government reduced the maximum amount of money home buyers can borrow from 80 per cent to 65 per cent of the total value of their properties.
Zarysky says this came as a shock to some, but she predicts that in 2014 condo buyers will be more accustomed to the new conditions.
“I think it’s bringing things into a balanced sort of arena where everybody knows what to expect.”
Karolina Craig, customer service manager for Central Condominiums’ Bank and Gladstone location, says the company hasn’t dropped its prices at all over the past year.
She says Centretown is still popular enough to sustain a high volume of condo developments.
“In real estate, location is the main thing and we’re in a good spot,” she says.
Zarysky is also optimistic about the condo market in 2014.
“I think it’s going to be quite a heated market this spring,” she says.