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After forecasting that Canadian housing prices would decline in 2021, Fitch Ratings now sees double-digit gains in the cards.

In a new report, the rating agency revised its housing market forecasts higher for several countries, citing factors such as an economic recovery that has proved stronger than expected and the rollout of Covid-19 vaccines, which has been faster than anticipated.

“Our muted home price expectations in December 2020 assumed that vaccine rollouts would only take effect around the middle of the year, that government support and debt relief would be lower (but still substantial) than 2020, and that the bounceback in property sales may not be sustained,” Fitch said.

However, the economy has performed better than expected, ongoing government supports have bolstered household incomes, and low interest rates have kept mortgage credit flowing too, it said.

As a result, it’s boosting forecasts for several markets, with the biggest revisions coming in Canada and Australia.

Last year, Fitch was expecting to see a 3% to 5% decline in Canadian housing markets in 2021. Yet, prices are up about 8% so far, and it now sees prices finishing the year up by 10% to 15%.

Along with the factors underpinning its other upward revisions, Fitch said the likely return of immigration to more normal levels this year supports its forecast for Canada.

Looking ahead, Fitch expects interest rates to increase in Canada in 2022, and to rise in the U.S. and Australia in 2023.

It also said price growth is expected to slow “in the medium term […] as new supply rises to meet demand.”

“If hybrid working is deemed a success by both employers and employees, demand for suburban areas will likely remain high, while the premiums for city centre housing will reduce,” it said.