Ottawa Sees Rise In Luxury Homes

International Buyers High-end sales more than triple, Royal LePage says

By Grant Surridge, Financial Post

gsurridge@nationalpost.com

Overseas cash is fuelling Ottawa's rise to new kid on the block for luxury home sales in Canada.

Foreigners made up a third of the region's buyers of high-end homes, whose sales more than tripled in the first quarter of this year, says a Royal LePage survey released yesterday.

"Gone are the days that the local real estate market is completely linked to the federal government's increase or decrease in its labor tab," said Phil Soper, president and CEO of Royal LePage.  "The tech sector has enjoyed a recent resurgence, so international executives has been bidding up the prices in places like Rockcliffe Park."

While Toronto, Vancouver and Calgary continue to dominate the market for expensive homes, the number of homes priced more than $750,000 rose to 23 from seven.

The situation in the nation's capital reflects a broader trend across the country, supported by a robust market.

"In spite of continuing price increases, housing demand remains very strong,," said Gregory Klump, chief economist with the Canadian Real Estate Association. "The strength of the luxury market provides an excellent indicator of just how strong [that] demand is."

But it may be premature to rank Ottawa with the big boys.

"It depends: What is a luxury home?" said Pascal-Yvan Pelletier, an analyst with Canada Mortgage Housing Corp.  "You can have several houses that jump the [price] barrier and increase the percentage."

The average price of a home in Ottawa rose 3.6% in 2006 from a year earlier, and should jump 3.3% this year, CMHC says.

Mr. Soper said wealthy foreigners continue to splash money into Canada's biggest cities because real estate prices that cause the average Canadian to quiver, they see as affordable.

"What you can get in Mumbai for a couple of million dollars is a lot less than what you can get in Toronto."