Canada's housing market will slow, bank says
Scotiabank says Canada's housing market is expected to see a modest slowdown in sales heading into 2012 and relatively flat prices, while several other countries will struggle.
The bank said in a report released Tuesday that Canada's housing market has begun to cool, but it remains a "notable outperformer" compared with other countries.
"Ultra-low interest rates will continue to support affordability [in Canada] in the face of record high prices," senior economist Adrienne Warren said. "Nonetheless, heightened economic uncertainty combined with recent signs of a loss of momentum in Canada’s jobs market could keep some potential buyers on the sidelines for the time being."
Scotiabank said that of nine major developed markets it tracks, only three — Canada, France and Switzerland — had year-over-year real price growth in the second quarter of this year.
Prices in Canada were up by five per cent for that period, while figures for July and August show stable sales and a levelling out of prices.
In the other six countries — Sweden, the United States, the United Kingdom, Ireland, Australia and Spain — annual prices declined in the second quarter.
The bank said global housing demand is expected to remain "moribund" until the global economic recovery takes root and financial market stability returns.
"An oversupply of owner-occupied housing, due to overbuilding and rising foreclosures, remains problematic in many markets, adding to the downward pressure on prices," the bank said. "A generally more cautious lending environment also will hold back the pace of recovery."