A rise in mortgage rates and high unemployment are just two of the factors that are likely to hold back prices and sales.
Property experts say that although first-time buyers and Bank of Canada rate cuts have helped restore stability to a market that slumped from late 2008 to early this year caution is still needed.
'We should be less fearful than we were six months ago, but I don't think we should be exuberant yet. The resale markets in Canada are very strong. May figures were pretty good, and June numbers will be even better,' said Will Dunning, an economic consultant who specializes in the housing market.
'But by July and into the fall there will be an offset of considerably slower activity. I don't think it's likely to go off a cliff. It'll depend on what happens in employment and the broader economy, and how that affects confidence,' he added.
Indeed the latest data from the Canadian Real Estate Association suggest that Canada's residential property market, which has withstood the financial crisis much better than its hard-hit US neighbour, has been showing signs of improvement for several months.
May resale home prices rose 0.4% to $319,757, topping the previous record set a year earlier and the first year-over-year increase since May last year. Also sales activity climbed for the fourth month in a row.
The association, which represents more than 97,000 real estate brokers and agents, now expects sales activity to continue improving.
Philip Soper, chief executive officer of Brookfield Real Estate Services, an arm of Canadian property giant Brookfield Properties, expects a period of stabilisation over the next year.
Unemployment is one of the biggest dangers for the recovery. The jobless rate increased to an 11 year high in May.
