Welcome!

News Feed Item

Scotiabank: Global Housing Recovery Deepens

TORONTO, ON--(Marketwired - March 28, 2014) - The recovery in global property markets is becoming more entrenched and broadly based, according to the Scotiabank Global Real Estate Trends report released today. An improving economic outlook combined with historically low borrowing costs are buoying confidence in the sector, notwithstanding still soft labour markets in many regions.

"From a regional perspective, the U.S. housing recovery should remain an outperformer among advanced nations, while positive medium-term demographic and income trends support rising housing demand in many emerging markets in Asia and Latin America," said Adrienne Warren, Scotiabank's Senior Economist.

"Canada's housing sector appears to be moving back onto a more sustainable trajectory. Home sales in the first two months of the year were running just 1% above a year earlier and about 6% below the average level of the past decade. A combination of factors are contributing to the more moderate sales trend, including weaker job growth, lower housing affordability, and a widening gap between the cost of owning versus renting."

Highlights in the report include:

  • Canada's regional conditions vary substantially. Home sales in Calgary and Vancouver have picked up sharply over the past year, with demand in the former fuelled by strong employment and population growth well above the national pace, while the latter is recovering from weak conditions last year.
  • Sales were generally more muted in Ontario, Quebec and the Atlantic provinces, suggesting the winter deep-freeze continues to deter buyers.
  • Only in three provinces -- Alberta, Saskatchewan and Manitoba -- are sales trending above their 10-year average.

Read the full Scotiabank Global Real Estate Trends report below or find a copy online at http://www.scotiabank.com/ca/en/0,,3112,00.html.

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.

Scotiabank is a leading financial services provider in over 55 countries and Canada's most international bank. Through our team of more than 83,000 employees, Scotiabank and its affiliates offer a broad range of products and services, including personal and commercial banking, wealth management, corporate and investment banking to over 21 million customers. With assets of $783 billion (as at January 31, 2014), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS). Scotiabank distributes the Bank's media releases using Marketwired. For more information please visit www.scotiabank.com.

Global Housing Recovery Deepens

The recovery in global property markets is becoming more entrenched and broadly based. An improving economic outlook combined with historically low borrowing costs are buoying confidence in the sector, notwithstanding still soft labour markets in many regions. In our latest round-up of international house prices, roughly two-thirds of national markets posted real annual price appreciation through the end of 2013, up from 40% a year earlier.

Among advanced economies, Canada continues to hold its place near the top rungs of our survey. Average inflation-adjusted house prices rose 8% y/y in Q4. The national average increase is skewed by a mix of sales favouring some of the country's priciest markets, but most centres continue to post moderate annual price gains slightly outpacing inflation.

We expect the pace of Canadian house price growth will slow this year. Sales have been weakening since last fall as higher prices alongside tougher mortgage rules eroded affordability. Recent declines in some fixed mortgage rates may provide some temporary relief, although modestly higher borrowing costs are still on the horizon as global growth picks up. An emerging oversupply of condominiums in several large urban centres also risks putting downward pressure on prices. 

The U.S. housing recovery has lost some momentum. Affordability, while still good, has been dented by higher prices and borrowing costs. Meanwhile, tight credit conditions and lacklustre job growth have restricted the pool of first-time buyers, which remains well below normal levels. Even so, tight supply continues to underpin valuations, with real house prices up 6% y/y in Q4.

From a cyclical perspective, the U.S. housing expansion has further to go. Improving job and income growth should underpin strengthening sales this year, while new construction will widen the pool of listings. In both Canada and the United States, we expect some release of weather-induced pent-up demand this spring.

Property markets in Europe are mixed, mirroring divergent regional economic conditions. Improving domestic activity is supporting strengthening real house price growth in Ireland (+6% y/y), Germany (+5% y/y) and the U.K. (+3% y/y). Switzerland and Sweden are posting steady increases of around 4% y/y.

At the same time, weak economic growth and historically high unemployment continue to hold back the housing recovery in a number of other European nations, including France (-2% y/y). Conditions also remain quite weak in Spain (-5% y/y) and Italy (-6% y/y), though prices appear to be nearing a bottom after an extended period of declines. Improving regional growth prospects should support a more synchronized pickup in 2014.

A re-acceleration in home prices in China has lifted the nation back to the top of our international ranking, though the pace of increase has shown some signs of slowing in early 2014 amid moderate policy tightening. Australia's housing market also has heated up again (+7% y/y), while Indonesia and Thailand are seeing steady price growth of about 4% y/y. Conditions remain much softer in South Korea, India and Russia.

Latin American housing markets remain among the best performing in the group, supported by relatively healthy domestic demand and improving inflation dynamics that have allowed monetary policy easing in a number of countries. Peru and Colombia continue to lead the region with real house prices advancing around 10% y/y, while Chile is posting steady gains of 5% y/y. Mexico's housing market has lagged, but should benefit from domestic market reforms and a strengthening U.S. economy. Even Brazil's housing market has remained fairly resilient in the face of weak growth and a significant tightening in monetary policy.

Global property markets will likely gain further traction this year as the economic recovery becomes more entrenched and labour market prospects improve. Long-term borrowing costs are drifting higher, but excess capacity and subdued inflation should anchor short-term interest rates at historically low levels. From a regional perspective, the U.S. housing recovery should remain an outperformer among advanced nations, while positive medium-term demographic and income trends support rising housing demand in many emerging markets in Asia and Latin America.

Focus on Canada

- An Increasingly Diversified Market

Canada's housing sector appears to be moving back onto a more sustainable trajectory. Home sales in the first two months of the year were running just 1% above a year earlier and about 6% below the average level of the past decade. A combination of factors are contributing to the more moderate sales trend, including weaker job growth, lower housing affordability, and a widening gap between the cost of owning versus renting.

Prices continue to climb despite the more tempered sales environment. The national average house price in January/February was up almost 10% y/y. However, the headline increase is magnified by stronger sales in some of Canada's priciest markets, including Vancouver. Constant quality house price measures put the underlying price trend at around 5% y/y -- consistent with a market that is fairly well balanced overall, though slightly favouring sellers in some segments.

Regional conditions vary substantially. Home sales in Calgary and Vancouver have picked up sharply over the past year, with demand in the former fuelled by strong employment and population growth well above the national pace, while the latter is recovering from weak conditions last year. Sales were generally more muted in Ontario, Quebec and the Atlantic provinces, suggesting the winter deep-freeze continues to deter buyers. Only in three provinces -- Alberta, Saskatchewan and Manitoba -- are sales trending above their 10-year average.

In a few markets, including Toronto and Calgary, a lack of listings for single-family homes appears to be holding back sales. Sellers' conditions continue to dominate the undersupplied single-family market, lifting already high prices even higher. Buyers have more leverage in the more-amply supplied condominium market, notably in Toronto where prices are posting moderate increases even amid strong demand. As a result, the price premium for a single-family home relative to a condominium continues to widen.

The shortage of single-family homes for sale combined with strained affordability for first-time buyers will buoy resale condominium demand in the year ahead, though prices should be restrained by sizeable new inventory of recently completed units. Sales and prices of new condominiums, a large share of which are purchased by investors, are expected to remain soft. Meanwhile, relatively tight market conditions could continue to pressure single-family home prices in some of Canada's largest urban centres.

Adrienne Warren
Scotiabank Economics
(416) 866-4315
[email protected]
or
Devinder Lamsar
Scotiabank Media Communications
(416) 933-1171
[email protected]

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Containers, microservices and DevOps are all the rage lately. You can read about how great they are and how they’ll change your life and the industry everywhere. So naturally when we started a new company and were deciding how to architect our app, we went with microservices, containers and DevOps. About now you’re expecting a story of how everything went so smoothly, we’re now pushing out code ten times a day, but the reality is quite different.
As Cybric's Chief Technology Officer, Mike D. Kail is responsible for the strategic vision and technical direction of the platform. Prior to founding Cybric, Mike was Yahoo's CIO and SVP of Infrastructure, where he led the IT and Data Center functions for the company. He has more than 24 years of IT Operations experience with a focus on highly-scalable architectures.
Traditional IT, great for stable systems of record, is struggling to cope with newer, agile systems of engagement requirements coming straight from the business. In his session at 18th Cloud Expo, William Morrish, General Manager of Product Sales at Interoute, will outline ways of exploiting new architectures to enable both systems and building them to support your existing platforms, with an eye for the future. Technologies such as Docker and the hyper-convergence of computing, networking and...
The hierarchical architecture that distributes "compute" within the network specially at the edge can enable new services by harnessing emerging technologies. But Edge-Compute comes at increased cost that needs to be managed and potentially augmented by creative architecture solutions as there will always a catching-up with the capacity demands. Processing power in smartphones has enhanced YoY and there is increasingly spare compute capacity that can be potentially pooled. Uber has successfully ...
An edge gateway is an essential piece of infrastructure for large scale cloud-based services. In his session at 17th Cloud Expo, Mikey Cohen, Manager, Edge Gateway at Netflix, detailed the purpose, benefits and use cases for an edge gateway to provide security, traffic management and cloud cross region resiliency. He discussed how a gateway can be used to enhance continuous deployment and help testing of new service versions and get service insights and more. Philosophical and architectural ap...
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
Disruption, Innovation, Artificial Intelligence and Machine Learning, Leadership and Management hear these words all day every day... lofty goals but how do we make it real? Add to that, that simply put, people don't like change. But what if we could implement and utilize these enterprise tools in a fast and "Non-Disruptive" way, enabling us to glean insights about our business, identify and reduce exposure, risk and liability, and secure business continuity?
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
By 2021, 500 million sensors are set to be deployed worldwide, nearly 40x as many as exist today. In order to scale fast and keep pace with industry growth, the team at Unacast turned to the public cloud to build the world's largest location data platform with optimal scalability, minimal DevOps, and maximum flexibility. Drawing from his experience with the Google Cloud Platform, VP of Engineering Andreas Heim will speak to the architecture of Unacast's platform and developer-focused processes.
While some developers care passionately about how data centers and clouds are architected, for most, it is only the end result that matters. To the majority of companies, technology exists to solve a business problem, and only delivers value when it is solving that problem. 2017 brings the mainstream adoption of containers for production workloads. In his session at 21st Cloud Expo, Ben McCormack, VP of Operations at Evernote, discussed how data centers of the future will be managed, how the p...
Chris Matthieu is the President & CEO of Computes, inc. He brings 30 years of experience in development and launches of disruptive technologies to create new market opportunities as well as enhance enterprise product portfolios with emerging technologies. His most recent venture was Octoblu, a cross-protocol Internet of Things (IoT) mesh network platform, acquired by Citrix. Prior to co-founding Octoblu, Chris was founder of Nodester, an open-source Node.JS PaaS which was acquired by AppFog and ...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace.
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.