It's the economic equivalent of a blast of cold water on a hot summer day.

Recent rumblings about the prospect of an inflation-fighting interest rate hike is certain to give Canadians – especially those contemplating a major purchase – something to think twice about. Not that it's likely to be a major deterrent, especially when it comes to the hot market for condominiums.

While the real estate market has been remarkably robust for several years, condos are out-performing other residential housing categories both in volume of sales and in price appreciation.

In Toronto in April, 47 per cent of all new home sales were condos and there was a 15 per cent increase in sales year over year. Nationally, condos now represent one-third of all new home construction in Canada in the past decade.

The really impressive numbers, however, lay in the price gains of condo units across Canada.

Data collected by Royal LePage shows that in the first three months of this year, condo prices on average were up 16.3 per cent from a year earlier, compared with 14.9 per cent appreciation in bungalow prices and 11.8 per cent gains for two-storey homes.

So what gives here?

Well, there are several fundamental reasons for the strength in condo markets.

For one thing, they still remain relatively affordable when compared with other residential options. And they are also typically located in central urban areas, which is where – according to the 2006 census results – Canadians are increasingly flocking.

That urban trend is reinforced by at least two others.

Although they live longer and stay in their homes longer, the aging Baby Boomer demographic is gradually downsizing and looking for a more maintenance and hassle-free lifestyle.

That translates into demand for condo units, as does the fact that Canada's future population growth is coming principally from immigration.

And census data shows that 72 per cent of all new Canadians choose to live in Toronto, Montreal or Vancouver.

Young first-time buyers are also choosing condos for their affordability and their access to downtown amenities – as well as the ability to avoid increasingly fraught commutes to suburban areas.

While these substantial attractions make a compelling case for condo life – or investment – there are some other critical considerations to bear in mind, however.

First and foremost, you have to be extremely realistic about your ability to live in communal, close-quarters with other people. Condos have abundant shared space and people have radically different expectations about how that should be used.

That means that however anxious you may be to secure a unit or win a bidding war, in addition to the fee structure and the special insurance costs, prospective buyers need to have a close look at the condo board, the age and ethnic composition of the building and the bylaws. Because the reality is that fierce legal disputes among unit holders are very common.

Doing your due diligence might even include reading the minutes from some past board meetings to get a clear sense of what some of the ongoing issues and debates may be in the building.

The age of the condo building – and the implications for tension with the neighbors - is also something upon which to reflect.

While an older building tends to have an established fee structure and financial record-as well as experienced condo board members-it is also more likely to require costly maintenance repairs and upgrades. But while both of these are eventualities are usually covered by the reserve fund, which is required by legislation in most provinces, they still tend to spark disputes.

Schisms between long-time residents and newcomers to an established building can also cause problems. While the established residents, who've paid into the reserve fund for years, have one set of priorities for spending the capital, the new arrivals - who've paid more for their units but less into the fund - have others.

But while living under democratic rules which ensure the majority prevails is one source of acute stress, the forging of those rules-and the attached costs-can also be a hugely contentious issue.

In new buildings, there's typically a rough template for governance and by-laws that's passed along from the developer. But refining the regime can be a messy business.

One Vancouver condo came close to meltdown over the issue of a concierge, who's salary was covered for the first year by the developer.

When the first budget was being drafted and the cost of the concierge service suddenly had to be factored in, there was a 65 per cent hike in the fees. The new board had to decide between expenses or services – a point on which there was little consensus.

Some of the most currently divisive issues are smoking and pets.

Disputes arise over smoking on balconies and terraces as well as within units, because the smell can permeate common areas like hallways. It's not unheard of for smokers to be asked to pay for special smoke-proofing of their units.

Pets and hardwood floors can also be acrimonious issues.

Non-pet people can claim allergies as a reason to push for a ban. And while many condos insist on broadloom carpet, banning hardwood floors because of noise considerations, the same allergy card can be played in those circumstances as well.

All of which may deliver a second blast of cold water.