“Eventually, however, improved housing affordability and pent-up demand will put many of these markets on a firmer footing. The era of ultralow borrowing costs in most developed economies is expected to persist for longer, while many developing economies are moving to reverse prior rate hikes.”

“Despite historically low borrowing costs, demand has been tempered by moderate income growth and tighter mortgage insurance rules,” the report states about Canada’s market. “Supply conditions are becoming better balanced in most parts of the country. We anticipate fairly flat sales and average prices over the latter half of the year.”

While the dip is small in Canada, the problems are worsening in other markets covered in the survey. House prices in Ireland have taken a 19 per cent hit, and the country faces a deeper housing slump than the one that hobbled the United States.

“The cumulative decline in prices from their early 2007 peak has reached a staggering 50 per cent,” the report states. “The share of mortgages in arrears three or more months climbed to 10 per cent at quarter end, double the comparable U.S. delinquency rate at its peak in early 2010.”

Other markets seeing sharp declines in the last quarter included Spain, China, Australia, Sweden, the United Kingdom, United States, Japan, Thailand, France, Mexico and Indonesia.Chile, South Korea and Switzerland eked out gains.

“The intensifying euro zone debt crisis, increasing financial market strains and moderating global growth suggest there is more downside risk to property prices in the near term,” the report states.

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