Soper relied heavily on the analysis of its own real estate professionals along with MLS and other housing data from 2011 to shape the forecast, part of The Royal LePage House Price Survey and Market Survey Forecast released Thursday.
That research shows that the average price of a home in Canada increased between 3.6 and 6.1 per cent in the fourth quarter of 2011, compared to the corresponding 2012 period.
Royal LePage expects average price growth to continue through 2012 and predicts national average prices to increase by 2.8 per cent by the end of the year.
That runs counter to the predictions of a growing number of economists and industry professionals now bracing for a price correction in key markets by as much as 10 per cent. That analysis is largely based on IMF and Bank of Canada assessments that prices may be inflated by an equal amount, with a glut of new condo inventory making that segment most susceptible to correction.
Still, Royal Lepage is identifying a lack of inventory in Toronto as responsible for the strong year-over-year price appreciation in 2011. Average price gains, in fact, ranged from 3.4 to 7.2 per cent for the housing types surveyed. Migration and low interest rates also drove up real estate prices.
In the aggregate, at the end of 2012, average house prices in Toronto are forecast to increase 2.6 per cent over 2011, according to the survey forecast. Edmonton should experience the same overall growth, with Calgary benefiting from an increase of 3.6 per cent, predicts Royal LePage.
Vancouver, the city largely responsible for moving overall prices up in 2011, should also see prices grow this year, although by a more modest average of 2.3 per cent.
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"In the recovery period following the 2008-2009 recession, I found myself repeatedly speaking of ‘irrational exuberance' in the Canadian housing market," said Phil Soper, president and CEO of Royal LePage Real Estate Services. "Expectations were too high and the pace of expansion unsupportable. With this report, I find myself in exactly the opposite position. Widespread calls for a major real estate correction in 2012 simply can't be justified. The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand - albeit at a slower pace."