While the Real Estate Market is relatively healthy in Canada, the same cannot be said for the rest of the world. According to the latest Real Estate trends report from Scotia Economics, many of the encouraging signs of recovery in various global markets over the past months seem to be faltering- and in some cases, even reversing direction.
"Increasing nervousness over global economic prospects alongside rising food and gas prices and persistently high unemployment are keeping potential buyers on the sidelines despite highly accommodative monetary policy," said Adrienne Warren, Senior Economist and Real Estate Specialist, Scotia Economics. "A lingering oversupply of housing and/or still tight credit conditions are reinforcing the downward pressure on sales and prices in a number of markets globally."
"A marked improvement in housing affordability, particularly in those regions suffering large valuation declines in recent years, will eventually put a firmer floor under prices and underpin a gradual turnaround for the sector," added Ms. Warren. "For the time being, however, the process of repairing bloated public and household balance sheets points to a protracted period of subpar economic growth among debt-heavy developed nations that will restrain household borrowing and spending. A generally more cautious lending environment also will hold back the pace of recovery."
In Canada, price appreciation has been a slow and steady race, with average inflation-adjusted home prices for Q1 up a respectable 5%, year-over year. Analysts warn too, that the national home prices do not necessarily reflect the nation region to region; prices have been inflated nationally due to surging prices in some pockets- namely from the wave of foreign investors flooding the Vancouver market.
Take Vancouver out of the equation, and prices have only appreciated a more realistic 1% year-over-year.
"Housing sales in Canada, while below the record-setting pace seen at the height of the boom in 2005-2007, are being supported by steady job creation and still attractive borrowing costs," stated Ms. Warren. "Relatively tight supply is adding to price pressures in several cities. Nonetheless, high home prices, the further tightening in mortgage insurance rules effective mid-March, and the upward drift in fixed mortgage rates this year appear to have slowed demand somewhat, most notably among first-time buyers. We anticipate relatively flat sales volumes and average prices through the latter half of the year."
Australia’s housing boom has faltered, partly due to the siege of natural disasters the region has been host to over the last year. Coupled with the fact that rising property prices are pushing boundaries of affordability, the housing market there is quickly running out of steam.
In Europe, troubled economies in various centres are causing some localized housing markets to sputter. In the UK, prices for Q1 were down 4%; in Spain, three years of a slow market seems to be continuing, with prices having fallen by 8%. Analysts warn that there is more of the same to come too.
Not all European markets were headed downwards in Q1. France and Switzerland saw price increases of 7% and 4% respectively.
In the U.S., the market is beginning to soften after some apparent momentum last year.
“The modest pickup in sales in the U.S. over the past six months has been primarily of investor-driven foreclosed properties, with little evidence of broader home buyer activity since the expiry of purchase incentives in early 2010," commented Ms. Warren. "Despite gradually improving job markets and near record housing affordability, the expected addition of at least another one million foreclosed properties to the market this year suggests more downside price risk in 2011."
Related Articles
Inflation slowdown brings hope interests rates will hold
Consumer Debt on the Rise in Canada
Monday, July 11, 2011
Subscribe to:
Posts (Atom)
