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The state of the global economy continues to pressure residential property markets around the world, with global home prices declining on a year-over-year basis in Q1 2012.

The real estate market in Europe has been most affected, says a Scotiabank report.

"Fiscal austerity measures, rising joblessness and tight credit conditions have sidelined potential buyers, even as central banks maintain highly accommodative monetary policy settings," says Adrienne Warren, senior economist, Scotiabank.

Housing conditions have cooled in Australia, Asia and Latin America, reflecting successful efforts by authorities to rein in property speculation through monetary restraint and regulatory measures. Fiscal stimulus and reduced global trade flows have also deeply affected economic momentum in these countries.

"The intensifying Eurozone debt crisis, increasing financial market strains and moderating global growth suggest there is more downside risk to property prices in the near term," says Warren.

She adds, "Eventually, though, improved housing affordability and pent-up demand will boost these markets."

Read: The pros of private real estate

The U.S. housing market has shown signs of stabilization in early 2012, though it will take more time to build renewed momentum. In Canada, housing remains an outperformer by comparison, with the national average house price falling 2% in Q1 2012.

Originally published on Advisor.ca