Canada's Property Market Cooling Even before Introduction of New Mortgage Rules

The property market in Canada was cooling even before Ottawa introduced tighter mortgage rules. In June existing home sales fell by 1.3% compared to May, and by 4.4% compared to a year earlier. The average house price declined by 0.8% compared to June last year to $369,339. These new rules will make the market even tougher, as 16 out of the 26 markets posted a fall in sales last month.

Not surprisingly Vancouver tops this list, but four cities in southern Ontario have also reported sales declines into the double digits. The mortgage rules were introduced by Finance Minister Jim Flaherty amid concerns about rising household debt and the possibility of a housing bubble.

The new regulations mean borrowers will be allowed to use up to 80% of their property's value as collateral for home equity loans, whereas before they could have used 85%. In addition the maximum amortisation period is now just 25 years for government insured mortgages, down from 30 years. Government backed mortgage insurance will only be available to homes with a purchase price of less than $1 million. In contrast with other previously introduced rules, there wasn't any rush by buyers to complete property purchases before these new regulations came into effect.

Property prices in Vancouver have declined by 13.3% year-on-year and it is very much a buyer’s market. Property prices in Toronto have increased by 6.8% year-on-year, but the biggest gains have been seen in Calgary, with increases into double digits and sales up by 16.7%. While economists cannot agree as to whether there will be a substantial price correction, estate agents feel the decline in sales activity combined with an increase in new listings has resulted in the housing market becoming more balanced.

Property Prices in Singapore Dropped Slightly during the First Quarter

According to figures published by the Urban Redevelopment Authority, the prices of residential property in Singapore fell by 0.1% during the first quarter of 2012. In comparison the previous quarter saw price increases of 0.2%, and this marked the end of nine consecutive quarters of declining price increases. This is the first fall in prices since the second quarter of 2009.

The property prices of non-landed properties in the Core Central Region, and the Rest of Central Region dropped by 0.6%, whereas the previous quarter had seen increases of 0.5% and 0.1% respectively. Property prices for homes within the Outside Central Region increased by 1.1% during the first quarter of this year, compared to 0.6% in the last quarter of 2011.

Rental rates increased by a slower percentage compared to the previous quarter, rising by just 0.3%, compared to 0.4% in the previous quarter. The rate of increase in rentals has been falling for three consecutive quarters.

Figures show 6,903 uncompleted private residential units were launched by developers during the first quarter of 2012, compared with 4,105 units during the last quarter of 2011. Developers sold 6,458 uncompleted private residential units during the first quarter of this year, compared with 3,525 units during the last quarter of 2011.

More than a quarter of all new sales were four units smaller than 50 m². Homes priced at less than $750,000 accounted for nearly half of all new sales, compared to just 25% of sales during the final quarter of last year. Most of these homes were in the suburbs, with 82% being sold in the Outside Central Region.