04/20/2012 01:27 EDT

Toronto House Prices Will Continue To Climb For 2 More Years: Central1


TORONTO -- A new report says home prices in Ontario will continue to rise through 2014 thanks to steady economic growth and low interest rates.

Credit union Central1 forecasts that the annual average price for previously owned homes will rise 3.4 per cent this year to $378,700.

It also expects 2013 to see a further increase of four per cent to an annual average price of $393,000, followed by a slower increase of 2.6 per cent in 2014.

Central1 says in a report released Friday that it's very unlikely there will be a sudden severe drop in home prices in Ontario without some sort of shock.

It says there's no sign that interest rates will shoot up rapidly or that a huge number of homes will be put up for sale, two factors that could shock the market.

Central1 says even cuts to government spending won't be severe enough to set back home prices over the next couple of years.

The credit union expects steady economic growth and low interest rates will result in 204,400 units of previously owned homes being sold in Ontario this year _ about 5,500 more than in its previous forecast.

The number of home resales is expected to be even higher next year, at 207,200 units sold through the MLS service.

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