TORONTO (Reuters) - The upward trend in Canada’s housing market will carry into 2012 as consumers take advantage of low interest rates and improving regional economies boost home-buying activity, one of Canada’s biggest real estate brokerages said on Tuesday.
A report by Re/Max said activity so far this year “defied conventional logic,” notching a strong performance despite concerns over the European debt crisis and its impact on the global economy.
The outlook said that 23 of the 26 markets under review expect average price hikes by the end of the year, ranging from 1 to 16 percent. The forecast for 2012 shows prices rising further, but at a more moderate pace.
“The Canadian housing market has demonstrated tremendous resilience in recent years, but 2011 stands out,” Michael Polzler, executive vice president, Re/Max Ontario-Atlantic Canada said in a statement.
“Instead of responding to economic concerns both here and abroad with a retreat in sales and prices, residential real estate markets actually experienced an upswing in the volatile third and final quarters.”
Canada’s housing sector avoided the subprime boom and collapse that drove the United States into recession and helped trigger the global financial crisis. But with near record low interest rates boosting prices, the fear for many policymakers is a fresh asset bubble could be in the works.
Re/Max said about 460,000 homes will change hands in 2011, up from the 447,010 units reported in 2010. In 2012, sales are expected to rise to 464,500.
The value of a Canadian home is set to climb 7 percent to C$363,000 ($358,300) in 2011, the brokerage predicted. By the end of 2012, it forecast the average price of a home in Canada will rise 2 percent to C$371,000.
Polzler said Canadian consumers are intent on making their moves now ahead of potentially higher housing values and interest rates.
As well, improvement in regional economies, especially during the second half of 2012, should further stimulate Canadian home-buying activity, Re/Max said.
The Bank of Canada kept its overnight interest rate at 1 percent on Tuesday, as expected, and gave no suggestion of an impending rate cut even though its view of the European debt crisis has clearly darkened.
Forecasters in a Reuters poll in late November predicted the central bank’s next move would be a rate increase, but not until the fourth quarter of next year.
($1 = 1.01 Canadian)
Reporting By Jennifer Kwan; Editing by Jeffrey Hodgson