FW: House prices to see steady climb

 TORONTO— The Canadian Press

Published Thursday, Jan. 06, 2011 7:17AM EST

A new survey says Canada's real estate market is heading into a stronger-than-expected year that will likely see home prices steadily rise, while overall transactions moderate.

Royal LePage reports that average home prices are expected to rise 3 per cent to $348,600 in 2011, while the number of transactions is predicted to fall 2 per cent.

The survey also found that average house prices rose between 3.9 per cent and 4.6 per cent in the fourth quarter of 2010.

Royal LePage said that price appreciation is expected to continue a moderate and steady climb throughout the year.

Activity in the housing sector was helped by low borrowing costs in the fourth quarter of last year, and the report says that trend will likely continue into the first half of 2011 as homebuyers weigh the possibility of rising mortgage rates later this year.

The survey found that, on a national basis, the average price of a detached bungalow rose to $324,531 in the fourth quarter — up 4.6 per cent from a year earlier.

Standard two-storey homes rose 4.4 per cent, to about $360,329, while condominium units increased by 3.9 per cent to $226,746.

“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.

“2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized.”

Alberta is expected to be one of the provincial market leaders as the economy in the oil-rich region starts to recover and local employers ramp up hiring.

The report estimates average prices in Calgary will increase 5.4 per cent this year with sales transactions rising 6.7 per cent. Edmonton home prices will increase 3.3 per cent, with predicted sales up 9.1 per cent.

Canada's real estate market has been on a rebound over much of the past year after sales dried up in late 2008 and hit a multi-year low in January, 2009.

The housing market's sudden plunge was sparked by a credit crunch that developed in the U.S. housing and lending industries, and gradually spread across the globe, causing a worldwide recession in the late summer and early fall of 2009.

The domestic real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.

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