By Susan PiggBusiness Reporter
Housing markets continue to hurt in much of the world with the list of countries seeing price declines outnumbering those with price increases by two to one, according to the latest Scotiabank Global Real Estate Trends report released Friday.
“Weak consumer confidence, high unemployment and tight credit conditions continue to weigh heavily on housing demand and pricing,” says Adrienne Warren, senior economist at Scotiabank.
The Canadian housing market remains “relatively buoyant,” the report notes, although it’s “shifted to a slower growth trajectory.”
Canadian house prices fell two per cent in the second quarter of 2012 over the same period a year ago, the report says. Housing demand has dampened because of slower job growth and tighter mortgage insurance rules which have made it tougher for first-time buyers. A more balanced supply of housing has kept price increases “restrained” in much of the country, it adds.
There are signs of “modest improvement” in major markets such as the United States, the United Kingdom, Australia and China, says Warren.
But it will take “considerably more time” for a sustained recovery, the report says.
The U.S. housing market is showing the most hopeful signs: Average inflation-adjusted home prices rose three per cent in the second quarter of 2012 over a year earlier, following prices declines from 2006 to 2011 that saw average prices drop 35 per cent from their peak.
Ireland’s battered housing market slumped 17 per cent in Q2, just slightly less than the 19 per cent decline in the first quarter of 2012. The average house in Ireland is now worth less than half its peak 2007 value, says the global trends report.
Spain’s house prices fell 10 per cent in the second quarter as economic chaos, 25 per cent unemployment and a large inventory of unsold houses added up to a more than 30 per cent decline in prices over the last five years.
European countries where the economies remain relatively stable are showing “some tentative signs of improvement,” says Warren, and prices in Australia appeared to be stabilizing although they are still down slightly.
A growing number of Asian cities are seeing price appreciation, but many others are still seeing prices at levels below Q2 2011.
Average house prices in Mexico remain flat after a one per cent decline in the first quarter.