By MARIO TONEGUZZI THU, JUN 9 2011

After some encouraging signs of revival last year, residential real estate markets in much of the developed world are losing momentum — or in some cases, even reversing course, according to the latest Global Real Estate Trends report released today by Scotia Economics.

"Increasing nervousness over global economic prospects alongside rising food and gas prices and persistently high unemployment are keeping potential buyers on the sidelines despite highly accommodative monetary policy," said Adrienne Warren, senior economist and real estate specialist with Scotia Economics. "A lingering oversupply of housing and/or still tight credit conditions are reinforcing the downward pressure on sales and prices in a number of markets globally."

Warren said Canada reported positive real price appreciation in the first quarter of 2011 with average inflation-adjusted home prices up five per cent year over year. The national average, however, is skewed by strong sales, including by foreign buyers, of high-priced properties in the Greater Vancouver Area. Excluding Vancouver, average real prices were up just one per cent consistent with a more balanced national market, she added.

"Housing sales in Canada, while below the record-setting pace seen at the height of the boom in 2005-2007, are being supported by steady job creation and still attractive borrowing costs," said Warren. "Relatively tight supply is adding to price pressures in several cities. Nonetheless, high home prices, the further tightening in mortgage insurance rules effective mid-March, and the upward drift in fixed mortgage rates this year appear to have slowed demand somewhat, most notably among first-time buyers. We anticipate relatively flat sales volumes and average prices through the latter half of the year."