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.
It expects the average price increases in Toronto, the country’s financial center, to be slim at 1 percent.
Soper said that more price appreciation and transactions are likely in the first half of the year as buyers rush into the market in advance of what are expected to be higher interest rates later in the year.
“However, housing market activity in the first half of 2011 will be modestly closer to the norm, as last year’s phenomenon was exacerbated by mid-year tightening of mortgage accessibility and the introduction of HST (harmonized sales tax) in Ontario and British Columbia,” Soper said.
Reporting by Claire Sibonney; editing by Peter Galloway