Canadian real estate brokerage Royal LePage expects home prices to rise 5.5 per cent in 2021, building on unexpectedly strong growth this year, driven by a shortage of properties for sale and record low interest rates.

Royal LePage said the aggregate price of a home in Canada is set to rise year-over-year to $746,100 in 2021. The median price of a two-storey detached house and condominium are projected to increase six per cent and 2.25 per cent to $890,100 and $522,700, respectively. The aggregate home price is based on a weighted model that uses median prices and includes all housing types.

The forecast is at odds with others, including government-backed mortgage insurer Canadian Mortgage and Housing Corporation, which predicts price decline in 2021, and some of the country’s biggest banks, which foresee more muted growth.

“The upward pressure on home prices will continue,” supported by lack of supply to meet surging demand and policy makers promise to keep interest rates at record low, Royal LePage chief executive Phil Soper said.

The average Canadian home price rose more than 15 per cent in October from a year earlier to an all-time high, according to the Canadian Real Estate Association.

Lenders Royal Bank of Canada and Bank of Nova Scotia said in their fiscal 2020 annual reports they expect house price growth of 0.6 per cent  over the next 12 months, citing economic uncertainties spurred by the coronavirus pandemic, weakness in condominium markets and constrained housing affordability.

Royal LePage expects the shift to larger homes, which has driven a surge in sales and prices of single-family houses this year, will moderate as “life returns to normal,” easing some of the pressure on condo markets.

Condominium demand is expected to be healthy in most of Canada’s biggest cities, except Toronto, where softer demand is seen continuing in the city centre, the group said.

Ottawa and Vancouver are expected to lead the country, with increases of 11.5 per cent and nine per cent respectively, while Calgary and Edmonton are set to lag with growth of 0.75 per cent and 1.5 per cent. Toronto prices are expected to rise 5.75 per cent.