Housing market to remain stable for two years: RBC - MoneySense

Housing market to remain stable for two years: RBC

Interest rate hikes to be offset by economic growth.

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Canada’s housing market is set to enjoy two years of calm thanks to a strong economy, according to the Royal Bank of Canada.

In a recent market update the bank forecasts real estate price gains of 0.5% in 2011 and 1.3% in 2012, and predicts that the Bank of Canada will raise interest rates by 100 basis points (1 percentage point) this year and another 150 basis points in 2012.

However, growth in real gross domestic product is expected to rise to 3.2% in 2011 from 2.9% in 2010, effectively canceling out the interest rate hikes. The net result should be no significant swings in housing prices.

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