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Compared to global real estate markets, Canada is mostly average

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guest | 21 Dec 2011, 05:09 PM Agree 0

House prices here have risen 85% since 1998, but that’s “relatively small” compared with some other global markets, said economist Adrienne Warren.
Ireland, for example, had prices gain 330% between 1992 and 2007, and despite three straight years of double-digit price decline since, it still has one of the largest overall price gain in the bank’s sample of 12 Western countries. Ireland’s average home price on the inflation-adjusted index is still up 149% since 1992.
Australian prices are up 114% since 1996, while UK prices are up 174% since 1995 – representing two of the other largest price gains in recent years for Western countries.
In contrast, the U.S. seems to be least overvalued, with prices back to mid-1990s levels, and down 31% from a 2005 peak. Japan is still recovering from its pre-90s boom, having real house prices drop 50% since 1991, according to Scotiabank’s inflation-adjusted index.
In the shorter term, Canada has had the best performance in price gain in 2011, rising 4.8% this past third quarter above the same average price in the third quarter in 2010.
“Canada falls in the middle of the pack,” said Warren in the report.
Only France, up 4.4%, and Switzerland, up 3.3%, also had price gains over that same period. Ireland was down 14.7% from last year, followed by a 8.9% decline in Spain and 7.5% slip in the U.S. prices.
The report was vague in predicting a more balanced Canadian real estate market in 2012.
“While the sector’s continued buoyancy is impressive, monthly data through November suggest prices have leveled off since the spring, with conditions in the majority of local markets in ‘balanced’ territory,” wrote Warren. “Ultra-low interest rates are still attracting buyers, but increased economic uncertainty combined with some recent slowing in the pace of hiring could dampen demand in the new year.”
Warren said that while the U.S. housing market is near its bottom, no turnaround is likely in the near future, due to weak economic conditions and tight lending restrictions that are keeping many out of the market.
  • Ryan G | 21 Dec 2011, 09:01 PM Agree 0
    Is it just me, but economists have been saying we should see a correction in the market the last couple of years? With the interest rates being so low, it allows the average person to purchase a home. I don't see the market correcting any time soon.
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