Uneven global housing market conditions persist

Global residential property markets continued to show a mixed performance through the second quarter, both across and within regions. Highly expansionary monetary policy is providing a strong pillar of support to this interest-sensitive sector in many nations around the globe. At the same time, moderate, uneven growth and volatile financial markets are hindering a broader and more synchronized improvement.

North America remains a regional outperformer. The U.S. housing recovery is gaining traction, with strengthening job markets, rising household formation and an easing in lending conditions lifting home sales and construction to multi-year highs. Canadian home sales and pricing are proving resilient in the face of a more challenging economic environment, buoyed by ultra-low borrowing costs and favourable homebuying demographics. Mexico's fledgling housing recovery is supported by wide-reaching market reforms aimed at spurring new residential development and broadening access to mortgage lending.

Elsewhere in the Americas, property markets in Chile, Colombia and Peru are showing positive but more muted momentum, consistent with a softening in regional growth dynamics. Housing conditions continue to deteriorate in Brazil, with a prolonged recession and rising unemployment compounded by high interest rates and rising inflation. 

Europe remains tiered. The faster-growing economies, including the U.K., Germany, Ireland and Sweden, are witnessing strong real house price appreciation. Spain's housing recovery is becoming more entrenched alongside a gradual improvement in labour market conditions and strong foreign purchases. Several other large economies in the region, including France and Italy, continue to post price declines amid a more tepid economic recovery. A deepening recession and high inflation have accelerated real property price declines in Russia, the weakest market in the Q2 price survey.

Conditions in Asia are more muted. Government efforts over the past year to revive China's property market, including lower lending rates, lower minimum downpayments and reduced curbs on speculators, are underpinning a modest turnaround. South Korea and Thailand are showing moderate real price growth, though Indonesia's market has stalled, prompting officials to propose loosening foreign buying restrictions. Australia's housing boom is showing no sign of letting up despite a tightening in macroprudential rules, with demand underpinned by strong population growth as well as investor and foreign purchases. 

Foreign demand, especially for luxury properties in top-tier cities, will likely remain high, as investors seek geographical and asset diversification. Traditionally popular markets for foreign buyers include the U.S., the U.K., Australia and Canada. Foreign exchange considerations are taking on a bigger role, increasing the attractiveness of properties in countries whose currencies have weakened at the expense of relatively stronger currency markets in the U.S. and the U.K.