Canada's housing market was among only six in advanced nations that posted growth in 2010, according to the latest Global Real Estate Trends report issued by Scotia Economics.

With its asking price of close to $1.5 million, this home in Vancouver's Kitsilano area demonstrates why a new report calls Canada's housing market a top performer internationally. (Jonathan Hayward/Associated Press)

But while the Canadian home market was among the best performing, it was also one of the most volatile, the report notes.

Home sales were unusually active during the winter and spring, but dropped off substantially during the summer, according to the report. It says that over the fall, sales returned to a more typical level.

"We are neither overtly optimistic nor pessimistic regarding the outlook for 2011," said Adrienne Warren, a senior economist with Scotia Economics.

'Overall, we anticipate a fairly lacklustre year for residential housing.'—Adrienne Warren, Scotia Economics

She expects interest rates to remain low well into 2011, providing an inducement for first-time and move-up buyers, which will keep sales at a decent level.

However modest employment and income growth is expected to restrain the market somewhat.

"Overall, we anticipate a fairly lacklustre year for residential housing, with modestly higher sales volumes and flat inflation-adjusted prices," Warren said. "The bigger risk likely awaits in 2012, when more significant interest rate increases, combined with record-high home prices, will notably strain affordability."

Australia had the hottest real estate market in 2010, according to the report, with home prices rising nearly 10 per cent over the year.

Demand there was supported by low unemployment and a tight housing supply.

"While Australia's close trade ties with Asia and resource wealth will continue to underpin a solid pace of domestic activity, higher interest rates will worsen already strained affordability," Warren said.

France, Sweden, Switzerland and the U.K. also recorded growth in their housing markets.

Germany and the United States were flat in 2010, even as the U.S. market struggled to rebound from a 30 per cent price correction over the previous four years.

Ireland, Italy, Japan and Spain all recorded price drops. Ireland's market was the worst among the 12 nations tracked. It posted double-digit price declines in 2010. Weak demand, oversupply and high unemployment are expected to keep Ireland's housing market in decline well into 2011.