Australia's soaring real estate market makes Canada's look cool by comparison, according to the latest global real estate trends report put out by Bank of Nova Scotia.
Boosted by extremely low unemployment, booming resource prices and a tight housing supply, Australia's housing inflation-adjusted prices shot up about 12 per cent year-over-year in 2010 using Scotia's estimates.
The market has been so hot that the Reserve Bank of Australia, the country's central bank, has hiked interest rates 175 basis points since October 2009.
Canada, by contrast, saw higher housing prices, but only about half of Australia's, or around 6 per cent. And now Scotiabank is ambivalent about the prospects for the coming year.
"We are neither overtly optimistic nor pessimistic regarding the outlook for 2011," Scotia's economics team noted in the report. Although the bank expects interest rates to stay extremely low, unemployment is still high and income growth isn't particularly strong.
In fact, Scotia feels that way for housing markets in a good chunk of the developed world. A number of countries used incentives like tax credits to shore up their real estate markets during the crisis, but consumers in most of these regions are now burdened with debt. That weighs on their confidence, Scotia said, and will likely discourage them from buying too much in 2011.
Scotia's real estate report tracked twelve advanced countries and found that twelve advanced countries' inflation-adjusted home prices jumped higher in 2010 - Australia, Canada, France, Sweden, Switzerland and the U.K. Germany and the U.S. had relatively flat house prices, while Ireland, Italy, Japan and Spain all suffered price declines.