Forbes recently ranked The Cheapest Canadian Cities To Buy A House, and the winner?

It’s certainly not Vancouver, which posted the largest price increase of Canada’s major markets in the first quarter of 2010.

And it’s not Toronto either, although a sharp increase in the number of homes for sale this spring is opening up more options for potential buyers.

No, the Number 1 cheapest city in Canada to buy a home isn’t actually a city at all — it’s the entire province of New Brunswick.

The Forbes article sang the praises of New Brunswick by noting:

Low housing prices combined with a higher-than-average income level make Moncton, St. John and Fredericton great options for buyers looking for a deal. According to the Canadian Real Estate Association (CREA), the average housing price in St. John and Frederiction is around $169,000, with the provincial average hovering around $155,000.

Here’s the Forbes list of Canada’s cheapest cities for homebuyers:

1. Anywhere in New Brunswick
2. Sydney and Cape Breton County, Nova Scotia
3. Windsor, Ontario
4. Gatineau, Quebec (just across the river from the nation’s capital, Ottawa)
5. Charlottetown, Prince Edward Island
6. Regina, Saskatchewan

But the good news for homebuyers across Canada, according to the Canada Mortgage and Housing Corporation, is that the housing market will move towards “balanced conditions” over the next two years as sales slow down slightly and inventory levels increase.

The CMHC is forecasting that the average home sale price across Canada is expected to stabilize through the end of 2010 and then rise modestly in 2011.

New Brunswick photo by tukanuk (flickr)