TORONTO (Reuters) - A continued rise in consumer confidence helped push up Canadian home sales and prices in the first quarter, but interest rate hikes expected later this year should cool the market, Royal LePage, a leading real estate broker, said on Thursday.
House prices were up in all key housing types surveyed by Royal LePage, building on the momentum of the previous two quarters.
The average price of a detached bungalow in Canada rose 11 percent year-over-year to C$329,209 ($325,950) in the first quarter, the survey showed. Standard two-storey homes rose 10.3 percent to C$365,141, and standard condominiums increased 10.9 percent to C$228,963.
“Even in our most frenzied pockets of market activity, the inevitable rise in interest rates coupled with home price appreciation will rein in demand as affordability erodes,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services.
“Expect house prices to continue to rise, but the rate of appreciation should ebb steadily, month by month, throughout the remainder of the year, as balance returns to the industry.”
The view is in line with that of many market watchers who expect a burst of sales in the spring before new mortgage rules, higher interest rates and new tax regimes in Ontario and British Columbia kick in later in the year.
Meantime, two of the country’s most frenzied markets continued to show firm gains. Vancouver posted the strongest year-over-year gains as detached bungalows rose 21.8 percent to C$906,045, while other housing types rose between 15.7 percent to 19.2 percent.
Greater Toronto home prices rose an average 10 to 13.3 percent year-over-year, with detached bungalows reaching an average price of C$459,107 in the first quarter.
Reporting by Ka Yan Ng; editing by Peter Galloway