House prices in Vancouver rose about 10 per cent in the last year - approaching $1.1-million for a two-storey home - nearly three times the national average, says a new report by real estate brokerage Royal LePage.
Despite the soaring values in Canada's most expensive housing market, prices nationally are expected to stabilize or only creep higher this year amid "tepid" improvements in employment, LePage said in a report Tuesday.
Phil Soper, president and chief executive officer of Royal LePage Real Estate Services, said that in most markets lower, single-digit percentage increases are more likely for the balance of the year.
The more modest increases in most markets predicted for 2011 comes after bigger price jumps in recent years fuelled by low mortgage rates and solid consumer confidence.
"We expect house prices will continue to creep up, but most of the excess demand created by the initial drop in interest rates has been satisfied and affordability continues to erode slowly," Mr. Soper said.
"While low interest rates continue to drive demand, the tepid pace at which employment levels are improving is tempering the rate of home price appreciation in many Canadian cities."
Canada has created about 300,000 jobs in the last year as the economy recovers from the the 2008-2009 recession. However, the jobless rate is still high - at 7.7 per cent - and future growth could be squeezed by rising interest rates and continued weakness in the United States.
In the first quarter of 2011, the Canadian national average price of a detached bungalow rose 4.3 per cent year-over-year to $341,355, while standard two-storey homes rose 3.5 per cent to $379,388.
Standard condominiums rose 4 per cent to $237,919.
However the pace of growth in the quarter was uneven across the country.
In Vancouver, a limited supply of homes for sale, low interest rates and demand from buyers from China continued to drive up prices with the cost of a two-storey house up 9.7 per cent from a year ago at nearly $1.1-million.
Meanwhile, a two-storey house in Toronto increased by 2.5 per cent to $589,929 and a similar house in Halifax increased 7.1 per cent to $298,000.
That compared with a drop of 2.1 per cent in Calgary for a similar house to $423,122.
Canada's big banks raised their posted rates for fixed rate mortgages last week. The posted rate at most Canadian banks for five-year closed mortgages - one of the most popular types of loans for Canadian home owners - is 5.69 per cent.
The Bank of Canada left its overnight rate unchanged Tuesday at one per cent, but the central bank is expected to raise the rate - which influences variable rate mortgages - later this year.
Meanwhile, Statistics Canada said its new housing price index rose 0.4 per cent in February, following a 0.2-per-cent increase in January.
The highest month-to-month increase, 1.8 per cent, was recorded in Regina, while Toronto, Oshawa, Ont., and Edmonton were also top contributors to the jump.
On a year-over-year basis, the index was 2.1 per cent higher in February.