Some of Canada?s major house markets show signs of overheating, although most others have shown a more healthy rate of moderate growth, according to a national real-estate sales organization. Prices for all key housing types were up more than 10 per cent across Canada in the first quarter on a national basis, according to a survey released on Thursday
However, Vancouver and Toronto prices rose too far on these local markets, almost by 20 percent in some cases. Standard two-story homes in Toronto were up 13.2 per cent, rising to $562,150 while condo prices rose a more moderate 10 per cent to $317,579. In the Vancouver area, detached bungalows climbed an eye-popping 21.8 per cent to $906,045 while two-storey homes were up 19.2 per cent to $987,5000 and standard condos were up 15.7 per cent from early 2009, rising to $470,000.
These two cities benefited from strong local economies and low mortgage rates which helped boosting the real estate market around the country in general. The Vancouver economy also gained a noticeable boost from the Winter Olympics and shows strength in all sectors.
Despite the prices rising, the market is expected to slow down later in the year as mortgage rates will start to increase to meet the demand for home loans and make it more difficult for potential homebuyers to afford higher-priced houses. The Bank of Canada is expected to push the rates up this summer to fight inflation in the economy. Many banks have raised their mortgage rates already by more than half a point in anticipation of the broader rate increases later this year.