Cooling housing markets are being seen in many major cities across the developed economies.
The dual factors of affordability and tighter mortgage lending restrictions are not confined to Canada’s hottest housing markets with many European nations, Australia, and New Zealand, all seeing cooling markets.
In Europe, Fitch Ratings says home price growth in Amsterdam, Berlin, Dublin and Madrid is expected to cool this year and next after several years of rapid growth across the continent while price drops are expected in London and Stockholm and prices in Paris will be in line with 2018 growth.
Lower participation from first-time buyers is a key factor.
As with many Canadian markets, supply has not kept up with demand in cities such as Madrid and Dublin, putting upward pressure on prices, while investors seeking a piece of rising rent returns have been impacting prices in Amsterdam and Dublin.
In Australia, falls in house prices and tight clamps on mortgage lending continued to cool the market; and the economy is slowing.
Corelogic confirmed last week that the current downturn in Australian house prices is now the worst on record, with prices nationally down 8.2% since the market peaked in September 2017. The fall outstrips the slide seen during the global financial crisis a decade ago.
The Australian central bank cut rates for the first time in three years last week, which is hoped to spark new interest in homebuying.
And in New Zealand, a recent report shows that the country is one of the most unaffordable in the world with the national median home price more than 6 times that of median income.