Chinese and Taiwanese Seek Japanese Bargains

One of the biggest property brokerage firms in Taiwan is helping Taiwanese and Chinese buyers find property investments in Japan, as the government restrictions are making it increasingly difficult to buy in their home markets. Japan is proving attractive due to low interest rates, and the high rental yields can be double those available in their home countries.

Property prices in Japan are currently low, while the Chinese and Taiwanese governments are currently trying to suppress property prices are due to their rapid increase over the last couple of years. China has already raised interest rates five times since October, has limited property purchases in Beijing and Shanghai and is now looking towards curbing the growth of property prices in smaller cities.

Taiwan has increased the cost of borrowing for five straight quarters, and has also introduced a new tax on luxury properties sold within two years of purchase. It's been estimated that this action will lower transaction volumes by 10% this year as the market is no longer so attractive to speculators.

The property market in Japan is already showing signs of recovery after the recent earthquake and tsunami. New housing starts increased by 6.4% in May compared to a year earlier, and a $25.5 billion disaster package has just been approved for rebuilding after the earthquake. Rental yields in the country are around 5% to 6%, which is double that of China or Taiwan, as property prices here haven't increased as substantially as other Asian markets. Chinese investors in particular are increasingly looking for other markets, as they prefer to relocate assets offshore.

US Foreclosure Numbers Show Increase

The number of homes in the US that received foreclosure filings rose last month which is the first increase for three months. According to RealtyTrac, notices of repossession, default or auction sale were sent to 222,740 homes in June which is a 4% increase on the previous month.

This rise may be due to the increase in the number of properties sold, as banks could be prompted to issue foreclosure notices. The numbers of foreclosures had slowed in previous months as the banks became worried about the high numbers of homes hitting the market and subsequently dragging down prices.

Some experts feel that delaying the number of foreclosures is just delaying the recovery in the housing market, and there are estimates that it could take as long as 2015 or 2016 for prices to begin recovering.

During the first six months of the year the number of homes receiving foreclosure notices had fallen by 25% when compared to the last six months of 2010, and by 29% compared to the first six months of last year.

Sales of previously owned property in the US declined to a six-month low in May, while the supply increased which is a clear indication that the housing market is still in the doldrums.

Prices of foreclosure and short sale properties are typically around 20% below market value, and these represented about a third of all transactions in May, which is slightly less than the 37% recorded in April. Nevada still has the dubious distinction of having the highest foreclosure rate in the US with an incredible one in 21 homes receiving foreclosure notices.

Residential property market in Hong Kong remains strong

According to a report from Jones Lang LaSalle, the property market in Hong Kong remains strong in spite of a slowdown in sales volume. The report points towards low interest rates, limited space availability, corporate expansion and strong consumption as the reason for this continued growth.

The Hong Kong government imposed cooling measures over the last year, and this led to an initial slowdown in sales growth during the first six months of 2011. There were a total of 55,200 sales and purchase agreements during the last six months, and this is 16% less than the previous year, but with the number of transactions averaging 9,200 per month, this level is still considered to be healthy.

There were 1,260 transactions for property valued at HK$20 million or more, during the first six months of this year, and although this is 33% less than the last six months of 2010, it is still 7% more when measured on a year on year basis.

The total of these transactions was HK$59.4 billion which is 20% less than the second half of 2010 but 11% more year-on-year. In fact the capital values of luxury property has increased by 16.2% this year, and rents have gone up by 4.9% which is mainly due to demand from corporate expatriates.

The overall price of residential properties has increased by 10.1% this year, and this increase is mainly due to higher household incomes and a lack of available housing. Sales of new properties have slowed as just 4,700 new units were sold between January and May, while 13,600 units were sold during the previous 12 months. Experts expect sales volumes to remain low for this year, but don't see any real market risks.

US banks easing terms on risky loans

Two of the largest US banks, the Bank of America and JP Morgan Chase, are helping borrowers by easing their mortgage terms or cutting their debt, and some of the grateful recipients are not even in default.

One lucky borrower received a letter last year from Chase telling her the amount she owed on her condominium would be cut in half. Her loan was for $300,000, but she wasn't in default, and although she didn't understand quite why they have chosen to do this she certainly wasn't going to turn down such a lucrative offer. However the offer was deliberately vague, and upon acceptance the interest rate was raised to around 5% so repayments remain roughly the same.

Before this offer was made this particular property owner was in negative equity, and as such was far more likely to be at risk of foreclosure as anyone in this position is more likely to move away to take a job than anyone who has a financial stake in the property.

Apparently banks are overhauling loans for borrowers who have pay option adjustable rate mortgages which were taken out in the late stages of the property boom, as these are viewed as potentially causing future problems. This type of loan allows borrowers to forgo making the principal payment and some of the interest payment for an introductory period which can last several years. The extra interest and monies owed are then added to the loan.

Although there are many homeowners who could desperately use this kind of assistance, the lucky few chosen to receive this help are often suspicious as to the motive. In March economists at the Federal Reserve wrote a paper saying they could find no real evidence that any lender is actually reducing principal on mortgages.

Holiday Home Buyers Advised to do Research

This is the time of year when many people holidaying abroad are tempted by the thought of owning a holiday home, and a few will go ahead and make their purchase without fully considering the consequences.

A new report from Smart Currency Exchange advises would be second home owners to approach this transaction in the same way as any other business or commercial transaction. This is especially true at the moment where many people are being tempted to buy abroad by the abundance of bargains in places such as Florida, Spain and Portugal.

One thing that Charles Purdy, Director of Smart Currency Exchange advises is to always have an exit strategy, as circumstances can change quite rapidly sometimes, and a lot of people may be forced, or may choose to return to the UK. One thing that people should always check is the year round weather, as some places which seem idyllic during the summer months can be anything but during the winter. Some of the amenities may shut during the low season, and there may be far fewer flights.

He advises people to rent for a few months or a longer before making their final choice, and to do their research thoroughly as to any future developments which may affect their property. Getting good legal advice is also essential, and it is worth paying extra to ensure it is independent. Buying a property overseas can be a life changing experience, but research is essential to ensure it is a positive life choice.