Canada's robust housing market is expected to continue into 2012 despite economic concerns from outside its borders, according to a new report from the Re/Max real-estate sales organization.
The real estate organization said in its housing outlook Tuesday that the market "defied logic" and outperformed expectations in 2011.
"The trend is expected to carry forward into 2012 as Canadians continue to demonstrate their faith in homeownership, despite concerns over the European debt crisis and its impact on the global economy," the firm added.
Home prices are expected to have risen in 23 of the 26 local markets that it tracks with about 460,000 homes expected to change hands this year. That's up three per cent from the 447,010 units reported in 2010.
"Instead of responding to economic concerns both here and abroad with a retreat in sales and prices, residential real estate markets actually experienced an upswing in the volatile third and final quarters," said Michael Polzler, executive vice president, Re/Max Ontario-Atlantic Canada.
"While clearly not impervious to the impact, Canadian consumers are intent on making their moves now, in advance of higher housing values and rising interest rates down the road."
The forecast comes at a time when central banks in Canada and the United States are keeping their key lending rates low to counter the economic drag caused by the European debt crisis.
The assurance of relatively low borrowing costs has probably given home buyers confidence while rising home values have kept new listings at a healthy level. Stable employment has provided some assurance to owners and buyers alike, although they have also been monitoring the darkening economic clouds.
Re/Max expects that sales and prices will continue to grow next year, but at a more moderate pace, with sales rising about one per cent over this year to 464,500 units in 2012.
It expects Calgary, Saskatoon and Halifax-Dartmouth will likely lead the country in unit sales in 2011, with the volume increasing by five per cent.
The Greater Toronto Area, St. John's, N.L., Saint John, N.B., Moncton and Regina are expected also see more sales next year, about three per cent above 2011.
Consistent with other data, Re/Max said the Canadian housing market picked up steam as the year went on -- helped by low interest rates and rising prices.
Many economists had expected the Bank of Canada would begin raising its key interest rate by the middle of 2011 but that didn't happen.
The central bank has kept interest rates low to stimulate the economy by making it less costly for businesses and consumers to borrow for their purchases.
That has also kept buyers competing for homes, sending the average home price up seven per cent this year to $363,000 this year, according to Re/Max's predictions.
By year-end 2012, it expects the average price in Canada will increase another two per cent to $371,000.
"The economic underpinnings support ongoing demand, particularly as job creation efforts continue and unemployment rates edge down further," says Elton Ash, regional executive vice president, for Re/Max in Western Canada.
"Nationally, we remain on an upward track, and the confidence consumers have demonstrated in housing over the past decade will prove well founded once again next year," he said.
"Overall, we're seeing an extension of the homeownership cycle, and it's great news for housing."
The Canadian Real Estate Association upwardly revised its housing forecast for 2011 and 2012 in November.
The industry association is now projecting sales this year will be up 1.4 per cent from 2010, half a percentage point better than the previous forecast.
CREA expects there will be slightly fewer units sold next year than in 2011, but the 0.5 per cent decline is an upward revision.
The association is now forecasting 453,300 home sales countrywide this year, up from 446,915 in 2010. The forecast for 2012 is 451,200 homes sold.
