Global housing markets remain under strain, says the latest Global Real Estate Trends report by Scotiabank. "Among the international property markets we track, the number of countries reporting declining average real prices on a year-over-year basis outnumbered those reporting increases by more than two-to-one," says Adrienne Warren, senior economist at Scotiabank. She adds, "Weak consumer confidence, high unemployment and tight credit conditions continue to weigh heavily on housing demand and pricing." Canadian housing activity remains relatively buoyant, but has slowed. Adjusted for inflation, national average prices fell 2% year-over-year in Q2 2012, matching Q1 declines. Read: Canadians confident about housing A slower pace of job growth and the cumulative effects of tighter mortgage insurance rules have also tempered housing demand. And more balanced supply conditions in most parts of the country have restrained price increases. "There were signs of modest improvement in a number of major markets, including the U.S., the U.K., Australia and China," says Warren. "Better housing affordability and renewed monetary policy easing in many developed nations and emerging markets — where prior tightening is being reversed — have helped to stabilize global market conditions." Even so, it will likely take considerably more time for a sustainable recovery to emerge. In particular, stronger income growth will be required to generate household purchasing power that will support higher home sales. Easing of restrictive lending conditions in a number of countries will also be required to broaden the pool of potential buyers across the globe. Read: Global real estate under pressure in Q1 The U.S. housing market is showing increasing signs of recovery, the report suggests, with average inflation-adjusted home prices rising 3% year-over-year in Q2 2012. This modest improvement follows steady price declines from 2006-2011, which saw average real prices plunge a cumulative 35% from their peak. Read: U.S. homebuilder signals recovery Housing markets remain weakest in Europe due to financial sector strains and deepening recessionary conditions. In Ireland, average inflation-adjusted house prices slumped 17% year-over-year in Q2 2012, only marginally less than Q1's 19% decline. Spain's property is showing no sign of letting up, since prices fell 10% year-over-year and brought the cumulative drop over the past five years to more than 30%. Facing a deep recession, a record unemployment rate of 25% and a large overhang of unsold homes, there is little relief on the horizon. "In European countries that are financially sound, there were some tentative signs of improvement," says Warren. Asia's property market performance was mixed. An increasing number of cities in China are seeing renewed home price appreciation, and this is being supported by an easing in monetary conditions. Average prices in the majority of major centers are still below year-ago levels in Q2 2011.
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