Many residential property markets around the world remain under considerable stress but Canada's housing market continues to shine among developed nations, states Scotiabank's expanded "Global Real Estate Trends" report.
"Canada's housing market remains an outperformer among developed nations. Adjusted for inflation, the national average house price fell two per cent year-over-year in the first quarter of 2012," writes Adrienne Warren, senior economist, Scotiabank. "Price trends are relatively steady in the majority of local markets, though a few, notably Toronto, continue to report strong appreciation."
Scotiabank expects the number of Canadian home sales and average prices will be flat in the latter half of 2012.
The ongoing strains are most pronounced in Europe, particularly in the recession-plagued peripheral economies. Fiscal austerity measures, rising joblessness and tight credit conditions have sidelined potential buyers even as central banks maintain highly accommodative monetary policy settings.
The temperature has also been turned down on housing activity in many developing nations in Asia and Latin America. This in part reflects successful efforts by authorities to rein in excessive property speculation through monetary restraint and/or regulatory measures. But it also mirrors an overall loss of economic momentum alongside the unwinding of earlier fiscal stimulus and reduced global trade flows.
"The intensifying Eurozone debt crisis, increasing financial market strains and moderating global growth suggest there is more downside risk to property prices in the near-term," Warren adds. "Eventually, however, improved housing affordability and pent-up demand will put many of these markets on a firmer footing."
Earlier this week, TD Bank economists predicted housing markets in Toronto and Vancouver are likely to pull back by about 15 per cent in the next two to three years.
Meanwhile, the Teranet-National Bank Composite House Price Index showed Canadian home prices rose 0.8 per cent in April from a month earlier and a 0.5 per cent gain in March, following a period of three declines in four months.