2011 home prices seen set for moderate rise

Thu Jan 6, 2011 12:44pm EST
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TORONTO (Reuters) - Canadian house prices rose in the fourth quarter and will climb at a moderate pace this year, while overall sales may drop slightly, Royal LePage, Canada's biggest residential real state broker, said on Thursday.

In the last quarter of 2010, the average price of a single detached bungalow was up 4.6 percent from a year earlier at C$324,531, Royal LePage said. A standard two-storey detached home rose 4.4 percent to C$360,329, while a standard condominium was up 3.9 percent at C$226,746.

Biggest gains were seen in the cities of Winnipeg, Ottawa, Montreal and St. John's.

Royal LePage forecast the average price of a home will rise 3 percent in 2011 to C$348,600. It said sales will fall by 2 percent.

"Trends in the housing market continue to be driven by the lingering after-effects of the recession," said Phil Soper, president and chief executive of Royal LePage Real Estate Services.

"Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels."

The Canadian housing market has cooled off in recent months after helping to lead the economy out of recession in 2009 and early 2010 in a move so pronounced it sparked speculation that a bubble might be forming.

Royal LePage said it expects the strongest provincial performance in 2011 to be in Alberta and the most price appreciation to be in mid-sized urban cities such as Winnipeg.

It also highlighted St. John's and Fredericton, New Brunswick, as cities where homes are the most affordable.   Continued...