Still More Weakness than Strength in Global Housing Markets: Scotiabank

Still More Weakness than Strength in Global Housing Markets: Scotiabank 
TORONTO, Dec. 11, 2012 /CNW/ - The downward pressure on pricing in a number of 
national housing markets appears to have eased over the summer and early fall 
though considerable strains remain, according to a Global Real Estate Trends 
report released today by Scotiabank. 
"In the majority of advanced and emerging nation property markets we track, 
average inflation-adjusted house prices were negative on a year-over-year 
(y/y) basis in the third quarter," said Adrienne Warren, Senior Economist 
and Real Estate Specialist at Scotiabank. "However many are showing some 
tentative signs of stabilization, including the U.S., the U.K., Australia and 
China, supported in part by highly accommodative monetary policy." 
At the same time, there is little evidence of significantly improved momentum. 
Outside of the continuing deep property slumps in Spain and Ireland, pricing 
in most national housing markets appears range-bound for the time being. In 12 
of the 17 (71%) countries reporting Q3 data, average prices were in a +/- 3% 
y/y range. In 14 (82%), they were within +/- 4% y/y. 
"This relatively flat global performance suggests an ongoing high degree of 
caution among households and investors unwilling to make big residential 
property bets at this juncture," said Ms. Warren. "Lower home prices and 
historically low interest rates are supporting affordability, but in many 
countries mortgage lending conditions remain tight and unemployment is 
According to the report, Canadian housing activity has geared down. Average 
inflation-adjusted home prices were moderately below year-ago levels (-1.5% 
y/y) for a third consecutive quarter in Q3. Exhausted pent-up demand and 
reduced housing affordability in high-cost urban centres have dampened sales, 
while the return of balanced conditions in the majority of local markets has 
cooled pricing. 
At the same time, housing activity in the U.S. is gearing up. Real home prices 
rose 5% y/y in Q3, an acceleration from the 3% advance recorded in the prior 
quarter. Despite the uptick, average prices are still down roughly 30% from 
their 2005 peak, underscoring the long road to recovery ahead for the U.S. 
housing market. The improvement is being supported by moderate job growth, 
record housing affordability and fewer distressed property sales. 
Housing markets remain weakest in Europe, not unexpectedly given ongoing 
recessionary conditions, fragile consumer confidence and high joblessness. The 
euro zone wide unemployment rate rose to a record 11.7% in October, while for 
young workers under 25 it has soared to almost 24%. Wage compression and 
emigration are further reducing the pool of potential homebuyers. These 
markets are expected to remain under pressure through 2013. 
Real home prices in the majority of major cities in China were modestly below 
year-ago levels in Q3, though conditions appear to be steadying. Official 
efforts in recent years to rein in soaring property values appear to have 
succeeded, allowing for some easing in monetary policy. In India, a muted 
economic performance, weak consumer confidence and high inflation and interest 
rates are weighing on the country's housing market. Real house prices declined 
y/y in the majority of major cities for a second consecutive quarter in Q3. 
In the Latin American region, average real house prices were down 1% y/y in Q3 
in Mexico, where persistent inflationary pressure are keeping policy interest 
rates relatively elevated. Chile is reporting moderate residential property 
price gains averaging 2% y/y, supported by relatively strong domestic activity 
and a tight labour market. Colombia continued to record strong house price 
growth through Q2, though slowing consumer spending and credit demand point to 
some deceleration since mid-year. 
Scotiabank provides clients with in-depth research into the factors shaping 
the outlook for Canada and the global economy, including macroeconomic 
developments, currency and capital market trends, commodity and industry 
performance, as well as monetary, fiscal and public policy issues. For more 
Scotiabank economic publications visit,,3112,00.html. For high-resolution video 
clips visit 
Scotiabank is one of North America's premier financial institutions and 
Canada's most international bank. With more than 81,000 employees, Scotiabank 
and its affiliates serve some 19 million customers in more than 55 countries 
around the world. Scotiabank offers a broad range of products and services 
including personal, commercial, corporate and investment banking. In December 
2012, Scotiabank became the first Canadian bank to be named Global Bank of the 
Year and Bank of the Year in the Americas by The Banker magazine, a Financial 
Times publication. With assets of $668 billion (as at October 31, 2012), 
Scotiabank trades on the Toronto (BNS) and New York Exchanges (BNS). For more 
information please visit 
Adrienne Warren, Scotiabank Economics, (416) 
866-4315,; or Joe Konecny, Scotiabank Media 
Communications, (416) 933-1795, 
SOURCE: Scotiabank - Economic Reports 
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CO: Scotiabank
ST: Ontario
-0- Dec/11/2012 12:00 GMT
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