* Home sales seen slowing in first half of 2013, but recovering by year-end
* Average home prices seen up 1.0 pct in 2013
* Average two-storey home price up 4.0 pct in Q4 from year earlier
By Andrea Hopkins
TORONTO, Jan 8 (Reuters) - Canada's housing market is expected to see a continued slowdown in sales in the first half of 2013, but the correction will be mild and brief, with prices still inching higher by the end of the year, one of Canada's largest realty companies said on Tuesday.
Dismissing fears of a sharp collapse in Canada's long-hot housing sector, Royal LePage Real Estate said resource-rich cities in Alberta and Saskatchewan will have strong growth in sales and prices, dampening the impact of an expected slowdown in previously booming cities like Toronto and Vancouver.
"A helpful comparison is to reflect on the beginning of 2009 when the country was in the grips of a very grim global recession," Phil Soper, president and chief executive of Royal LePage, said in the group's quarterly outlook.
"Price appreciation in Canada ground to a halt, but home values dropped only slightly. With economic fundamentals such as employment levels improving, we expect this cyclical correction to be short-lived."
Canada's housing market recovered strongly after a brief pause in 2009, with sales and prices roaring steadily higher into the first half of 2012. Fearing a bubble, the Canadian government tightened rules for mortgage lending as of July 2012, and home sales have begun to slow in many markets.
Experts are divided about whether the market will collapse, as it did in the United States, or simply have a soft landing, a s hi storically low interest rates support demand.
Royal LePage predicted the average national home price will be 1.0 percent higher at the end of 2013 compared to 2012, after an average year-over-year rise of between 2.0 percent and 4.0 percent in the fourth quarter of 2012.
In the fourth quarter, standard two-storey homes rose 4.0 percent year-over-year to C$390,444 ($395,500), while detached bungalows increased 3.6 percent to C$356,790. National average prices for standard condominiums increased 2.0 percent to C$239,374, according the report.
"More home buyers moved to the sidelines as 2012 progressed, as economic uncertainty abroad and reduced affordability became a drag on the market, however house prices proved resilient," Soper said in the report, arguing that home prices have risen faster than salaries and wages for three years and the market needs time to adjust.
The group expects the trend of slower sales seen in the second half of 2012 to continue through the first half of 2013. Comparisons "will begin to show improvement" in the third quarter 2013, with sales volumes that are relatively flat versus 2012, and return to growth in the final quarter of the year.
Home prices will show "very modest" appreciation for the next two years as interest rates remain low and first-time buyers adjust to the tighter mortgage rules by opting for cheaper homes or saving longer, R oyal LePage said.
Breaking down forecasts for key cities, Royal LePage said the average house price in Toronto will be 1.0 percent higher in 2013 than 2012, while Vancouver prices will fall 3.0 percent this year compared to 2012.
The average house price will rise in 2013 by 2.5 percent in Calgary, 4.0 percent in Regina, 3.8 percent in Montreal and 1.3 percent in Ottawa, it forecast.