Average house prices are expected to rise 6 per cent nationally next year, led by gains in Calgary, a Royal LePage Real Estate Services report said Thursday.

The move would follow record growth in both price appreciation and sales this year, the real-estate company said.

National average house prices are expected to be $271,800 in 2006. Transactions, meantime are seen easing 3 per cent to 467,540 unit sales from this year's expected record as interest rates head higher.

"Higher home prices in major market's a general public perception of slower market conditions and moderate interest rate increases are forecast to temper market activity as unit sales pull back from the records of 2005," Royal LePage said in its market forecast survey.

Higher prices for oil and gas, and the booming economies in the West that accompany them, will be one of the main influences on the housing market next y ear.

"The spill-over effect of increased capital spending, rising personal earning and the subsequent increase in population through migration, will allow real estate markets in western Canada to outpace the rest of the country," said Phil Soper, the company's president and chief executive.

Next year, the most affordable cities to buy housing will be Regina, with average prices at $138,000, Winnipeg, at $152,000 and Halifax, where prices are seen at $202,800.

The three most expensive cities to buy real estate will be Vancouver, where prices are expected be a hefty $469,700, Toronto at $364,000 and Calgary, at $283,400.

Prices are expected to surge the most in Calgary next year and the least in Montreal.

Written by: Tavia Grant and published in the Globe and Mail Update.