Recent Bank of Canada interest rate cut has not sparked homebuyer demand: Report

When Denis Dignard recently put his home up for sale just outside of Ottawa, he was excited the Bank of Canada was dropping its key interest rate for the first time in over four years.

“There’s a lot of homes on the market right now. There’s a ton of homes, and there’s no action,” said Dignard.

Despite the quarter-point cut, there has been no rush of buyers. Dignard notes “if you owe $1 million, they say, okay, we’re going to take $25,000 off that million dollars, you still owed a pile of money. So, (the interest rate cut) really didn’t generate a lot of, activity. We were disappointed, that’s for sure.”

After 30 showings and no offers on his home, Dignard and his partner decided to drop their asking price and added a few amenities to reel in potential buyers.

“We had to not only lower price, we had to add incentives to our home, like throwing in a Generac generator and other items with the home, like all the appliances, to really make it attractive,” added Dignard.

Curtis Fillier, president of the Ottawa Real Estate Board says while there is still a housing demand in Ottawa, house prices have remained high.

“It comes down to just affordability,” said Filler. “And housing affordability in the Ottawa area still remains a problem. House prices are not coming down. We’ve actually seen a half percent increase since this time last year.”

According to the latest Royal LePage House Price Survey for the second quarter of this year, the average home price in Canada is $824,300. That’s up 1.9 per cent from the same time last year, and up 1.5 per cent from the first quarter of 2024.

In the Ottawa Housing Market Report for June 2024, the average price of a home was up 2.4 per cent from this time last year to $686,535, but down 0.6 per cent from May 2024.

Experts believe many potential buyers are still hesitant of jumping into the housing market and waiting for another interest rate cut of 50 to 100 basis points.

“I don’t think it’s going to be the rush that we see in the past, because people are used to more of a conservative approach right now,” said Fillier. “I think there’s still a bit of a hold back, but I definitely do think with another rate cut, we’ll probably see a very positive fall market.”