May 5, 2020 – Housing affordability in Ottawa has declined from “affordable” in 2005 to “seriously unaffordable” in 2019 according to the Greater Ottawa Home Builders’ Association (GOHBA) and the Frontier Centre for Public Policy (FCPP).
In anticipation of the City’s discussion on a growth management strategy for the new Official Plan, GOHBA asked FCPP to review house price and income data since 2005 for the city of Ottawa, as well as the relationship between urban containment policy and housing affordability from an international perspective. The work was undertaken by Wendell Cox, Senior Fellow with the FCPP.
The FCPP measures housing affordability (the relationship between incomes and house prices) by using the “median multiple” – the median house price divided by the pre-tax median household income.
This measure shows that, from 2005 to 2019, the median multiple rose from an “affordable” 2.9 to a “seriously unaffordable” 4.1 (41%), this is the equivalent of 1.2 years in median household income.
Mr. Cox’s research also highlighted the significant growth in house prices in Ottawa more recently:
- Since 2015, house prices have risen 20.1%, outpacing the growth in household incomes (13.5%).
- The most recent Ottawa Real Estate Board data indicates an acceleration in house prices, with an
- annual average price increase to February 2020 of 21.5%. This is one-half greater than the 2018 to 2019 rate of 14.1%.
- In the six months from February to August 2019, house prices increased at an annualized rate of 9.6%, more than double the 2015 to 2019 rate.
- In the more recent six months from August 2019 to February 2020, house prices increased at an annual rate of 31.8%, triple the already elevated rate of the previous six months
Cox’s research also shows that urban containment has been associated with higher house prices relative to incomes.
“Underlying land values in Ottawa’s urban area could increase if there is insufficient urban boundary expansion to accommodate demand, and could lead to substantially worsened housing affordability, as has occurred in markets around the world that have failed to retain a competitive land markets,” says Cox.
Mr. Cox is available for media inquiries through GOHBA – firstname.lastname@example.org