Derek Abma, Financial Post
Home prices will continue a “moderate and steady climb” this year, helped along by an improving economy and low interest rates, according to a report released Thursday.
Real estate services firm Royal LePage said the average price of a home in Canada will rise 3% to $348,600, even as the number of transactions falls 2%.
It said that after a “lacklustre” third quarter in 2010, home prices were up between 3.9 and 4.6%, year over year, in the year’s fourth quarter. This marked a return to growth more typical of trends since the end of the recession, Royal LePage said.
The report said, similar to trends of last year, sales will be more robust in the first half of the year as homebuyers take advantage of low interest rates that could be on the rise in the near future. “Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels,” said Phil Soper, CEO of Royal LePage Real Estate Services. “We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs.”
The report said the strongest prices gains will happen in mid-sized cities where homes are priced below the national average. It noted places like Winnipeg, St. John’s and Fredericton, where single two-storey homes are still widely available for less than $300,000. Alberta’s housing market is also expected to be strong in the coming year, as the energy sector helps fuel a strong hiring climate.