A strengthening economy, rising consumer confidence and better job prospects are expected to bolster the Canadian real estate market in 2011, with higher than expected growth forecast.

The Canadian Real Estate Association (CREA) has revised its prediction for residential sales this year, with the firm stating that transaction levels will pick up after a slow start.

Even though mortgage interest rates are expected to rise later this year, they will still be within short reach of current levels and remain supportive for housing market activity. Strengthening economic fundamentals will keep the housing market in balance, which will keep home prices stable, said Gregory Klump, chief economist at CREA.

Added to this, CREA expects residential home values to rise by 1.3 per cent in the coming months to an average of USD 343,300 by the end of the year.

This average price increase will be seen in most provinces, the organisation added, reflecting the continuation of a healthy balance between supply of and demand for homes listed for sale.