Whether you are looking to buy or deciding if this is the year to sell, the question on many minds both at home and abroad is, "Will Canadian real estate keep booming?" For years now, predictions that house prices would stop climbing, or even crash, have repeatedly proven false. Could 2017 be the year?

Here's a look at five factors that could affect Canadian real estate in 2017.

1. U.S. Federal Reserve's interest rates

Federal Reserve Chair Janet Yellen has indicated she could raise interest rates three times in 2017, increasing some mortgage rates by a full percentage point. (Gary Cameron/Reuters)

Although the Canadian and American central banks set their interest rates independently, the rate set by U.S. Federal Reserve Chair Janet Yellen has a huge impact on Canadian mortgage rates. That's because mortgage lenders take their cue from global bond rates set in New York. Why lend to homebuyers at less than you could get on the same money in safe bonds?

When she increased rates by a quarter of a percentage point in December, Yellen implied there would be three more rate rises in 2017. That means prospective Canadian homebuyers should expect mortgage rates to get more expensive in the coming year, though many market commentators have expressed doubts that Yellen will move that fast. 

2. Canadian economy

The real estate market tends to slow down as winter strikes. The health of the overall Canadian economy can have a major impact on house prices. (Mack Duffy)

If Canadians feel real estate prices are going to stay strong, a small rise in interest rates won't necessarily put them off buying a family home. But rising rates plus a weakening Canadian economy could conspire to reduce the total number of domestic buyers and put downward pressure on the market.

Predictions for the Canadian economy have been all over the map as analysts balance a resurgence in oil and gas, rising manufacturing and a weaker loonie against fears for trade in a Donald Trump-dominated North America. Last week, a British think-tank, the Centre for Economics and Business Research, predicted Canadian growth would stall at two per cent as the economy slips from 10th place to 12th, behind Indonesia and South Korea.

3. Foreign buyers

China has been trying to crack down on techniques to get money out of the country as the currency falls, but millions of Chinese continue to look for good foreign investments, including Canadian real estate. (Reuters)

The Canadian Press news agency declared the "foreign investor" Canada's business newsmaker of the year. And while many have scoffed at the impact of foreign buyers on the domestic real estate market, there is little question that a sudden decline of outside buyers, especially from China, could have a slowing effect on Canadian house prices.

The importance of the investment from China is its absolute size. Not only the wealthy, but millions of middle-class investors are looking for places to stash money as the Chinese currency falls. So far the Chinese government has failed to stop the flood of money out of the country, but that could change. 

4. Construction 

Construction workers are making more real estate, but the CMHC is watching carefully to see if new construction is keeping pace with demand. (Ben Nelms/Bloomberg)

It used to be said that land prices could never fall because "they ain't makin' any more of it." Now that a major part of the real estate market is not just suburban building lots but highrise condos, that is no longer strictly true.

So far, there has been no shortage of real estate developments in Canada's priciest cities. Nor has there been any shortage of buyers to snap up newly constructed flats. The government's Canada Mortgage and Housing Corporation and real estate analysts will be watching carefully to see whether construction and potential buyers stay in balance.

5. Government regulation 

B.C. Premier Christy Clark raised taxes on foreign homebuyers, but critics say a new provincial loan to help first-time homebuyers will increase demand. (CBC)

A wild card in the housing market is how governments react to changes in real estate prices. No matter how strong their stated commitment to market forces, as we've seen at both the federal and provincial levels, governments are willing to meddle when they get blamed for prices that are unaffordable. 

The trouble is a sudden change in rules, such as the tax on foreign buyers in Vancouver, can cause equally sudden distortions in the expected path of house prices. If prices were to begin to fall, inevitably governments could become worried about the impact on the wider economy, in which real estate has become a reliable driver of jobs and growth.