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A house is seen for sale on the real estate market in Toronto, April 9, 2009. Canadian housing starts rose an unexpectedly strong 13.7 percent in March, breaking a six-month losing streak, but analysts said the recovery is likely to be temporary. REUTERS/Mark Blinch (CANADA BUSINESS)

Mark Blinch/Mark Blinch/REUTERS

Canada's housing sector is expected to remain "unusually strong" in the first half of the year, then trend towards a more balanced market, Royal LePage, a leading real estate broker, said Thursday.

Improving economic conditions and steady low interest rates will stoke demand as 2010 gets under way, but higher home prices coupled with expectations of rising interest rates could cool the market later in the year.

The housing market virtually halted late in 2008 in the wake of the global financial crisis, as consumer confidence plummeted. It has since recovered swiftly on pent-up demand and improved affordability, which has triggered some concerns about a housing bubble.

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"Our forecast is built upon an expectation that interest rates will ease upward before the year's end, which should have a dampening effect on demand, allowing it to come into balance with the supply of resale homes on the market," said Phil Soper, president and chief executive of Royal LePage Real Estate Services.



Investor Education:

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Home prices continued to rise in the fourth quarter of 2009, building on the momentum from the previous quarter.

According to its house price survey, Royal LePage said the average price of a two-storey home in Canada rose 5.2 per cent to $353,026 in the fourth quarter. Average bungalow values rose 6 per cent to $315,055 from a year ago, and the average price of a condominium rose to $205,756, up 6.4 per cent.

Regionally, Toronto and the Lower Mainland of British Columbia, particularly Vancouver, had a solid fourth quarter, with prices rising across all housing types surveyed.

Nearly all of the 16 markets surveyed showed price gains across the three housing types.

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