Scotiabank just released its Global Real Estate Trends study this past week. In it are indications that real estate markets in many nations are apparently improving. That improvement has been tracked throughout this past summer and into the first part of the fall season. Even though prices are still lower in the third quarter of 2012 than they were during the same time period in 2011, some nations, such as the United States and the United Kingdom, are moving towards stabilization. China and Australia are also seeing improved numbers. All of these nations have very accommodative monetary policies. Will this affect homes for sale in Vancouver?
But the overall momentum is still lagging. Ireland and Spain are still experiencing severe property declines. Seventeen countries were included in the report. Of these, 12, or 71 percent of those surveyed, saw third quarter numbers that were within three percent of those in 2011, while 82 percent, or 14 countries, were within four percent.
Indications are that on a global level, investors and potential homebuyers are taking a wait and see attitude, preferring not to take undue financial risk. The rock bottom interest rates and more affordable home prices are, in some countries, being offset by tougher lending laws and high unemployment.
In Canada, activity in the housing market has slowed down. If you adjust the average home price to account for inflation, the third quarter average price nationwide is about 1.5 percent less than during the same time period in 2011. In some cases the supply is outweighing the demand, causing home prices to decrease. In other areas of the country, particularly in some urban centres, homes are less affordable, partly due to the change in the lending laws this past July. Not as many people can qualify for a mortgage. First time homebuyers were the hardest hit by this. But many markets are near to or in balanced territory.
The housing market in the United States is heating up. The third quarter saw a five percent year over year increase in price, better than the three percent seen in the second quarter. Even with that, home prices are still roughly 30 percent less than seen in 2005, when prices were at their peak. It will be some time before those numbers, or close to that, are seen again. On the other hand, the country is seeing job growth, moderately speaking, and fewer forced property sales.
The European market is still experiencing the weakest sales, due largely to the recession that still lingers. Consumer confidence is on the low side. The unemployment rate remains high, which collectively through the Euro zone was at 11.7 percent this past October. For those under the age of 25, that rate was nearly 24 percent. Lower wages and the number of people leaving Europe are also cutting down the number of interested home buyers. The picture is expected to stay much the same through the end of next year.
Most of China’s major cities saw lower home prices overall this third quarter, compared to the same time period in 2011. Governmental efforts at curbing soaring real estate prices have apparently had an effect. India’s housing market is being affected by high inflation, unfavorable interest rates and a waning consumer confidence. Most of that country’s major cities saw a price decline in this year’s third quarter.
Mexico saw their average real estate costs decrease by one percent in the third quarter, thanks to high interest rates and inflation. Elsewhere in Latin America, Chile saw a two percent gain in that same quarter compared to 2011. That country is experiencing a tight labor market and is doing well domestically. Columbia saw housing prices increase in 2012’s second quarter, but that appears to be slowing down.