Although Canadian house prices rose by 5.5% year on year in October 2011, it was the smallest gain since January according to the Canadian Real Estate Association (CREA).

Sales increased during October by 1.2%, building on the 2.5% gain in September, bringing activity up to the highest point since January 2011.

Gregory Klump, CREA’s chief economist, said: “The prevailing economic outlook for Canada is one of slower but still positive economic growth, with heightened caution about investment and hiring decisions. Consumer confidence and the housing sector are being supported by low interest rates and high employment levels, but their prospects depend on how Canada’s economic outlook evolves in response to global economic risks and outcomes in the months ahead.”

A total of 397,561 homes have changed hands so far in 2011, representing an increase of 1.8% on the first 10 months of 2010, however it is in line with the 10-year average for the year-to-date figure.

Gary Morse, CREA’s president, said: “There was no shortage of headline news in October about global financial market volatility and economic uncertainty, but it doesn’t appear to have dampened homebuyers’ spirits. Interest rates are at low levels and are likely to stay that way for some time to come. Homebuyers clearly see the opportunities that the current interest rate environment presents.

“Home sales activity over the past couple of months suggests buyers are confident that the Canadian economy will remain relatively unscathed by global economic risks, since every home purchase is a homebuyer’s vote of confidence in the future.”