February 8, 2010

Canada’s housing market is set to hit a new record in 2010, with low interest rates fuelling sales across the country, the Canadian Real Estate Association said.

Sales are likely to rise 13.3% this year to 527,300 units, topping the previous record set in 2007, the CREA said.
Prices are forecast to rise 5.4% to a national average of $337,500.

Historic low interest rates are stoking the housing market and raising concern households are taking on too much debt to fund property purchases. The Bank of Canada is expected to begin raising rates from the second half of this year, taking some of the steam out of the market.

The CREA forecasts that sales will decline 7.1% in 2011 to 490,100 units. Prices will dip 1.5%, it said.

"Although interest rates are expected to rise, they will still be low enough to keep affordability within reach for many homebuyers requiring mortgage financing, and support overall housing demand," said CREA President Dale Ripplinger.

The rebound of houses in the upper price bracket in some of Canada’s most expensive markets, such as British Colombia and Ontario, skewed the average price levels towards the end of 2009.

That segment of the market is likely to cool in the second half of 2010, meaning the average price will also ease, the CREA said.

canoe.ca