Sales transactions of residential property in Canada are expected to fall by 7.3% in 2011 although property prices are likely to rise higher than a previous forecast according to the Canadian Real Estate Association (CREA).

National sales activity is forecast to reach 459,600 units in 2010, representing an annual decline of 1.2%, however weaker economic growth and consumer spending will contribute to a fall to 426,100 units in 2011.

Georges Pahud, CREA president, said: “The Bank of Canada recognizes that inflation remains well contained and that economic growth will soften, so interest rates will rise slowly and at a measured pace, which will keep home financing within reach for many homebuyers.

“While the jump in national sales activity earlier this year likely borrowed from the future, local markets trends are not necessarily in sync with national trends, so buyers and sellers would do well to consult with their local agent to best understand the outlook in their market.”

The average price of properties has remained stable as new listings have shrunk during in the last two months of the second quarter. Supply is expected to continue to adjust to lower demand, keeping the resale housing market balanced on a national basis and in most provinces. The national average home price is now forecast by CREA to rise 3.5% in 2010 to $331,600, with increases in all provinces.