Dubai's Property Market Recovery Slowed by Global Worries and European Sovereign Debt Crisis

Dubai's property market is still looking at tough times ahead, as its recovery is being slowed down by worries over the global recovery and the European sovereign debt crisis. Property prices have already fallen by an average of 60% from their peak, and it is now estimated they will fall a further 10%. The problem is that even though sales volumes are improving, and some sectors are seeing slight increases in prices, the market is still blighted by oversupply and lack of investor interest.

Most experts see no signs of a recovery this year, although over a third expects things to improve slightly next year, while two thirds expect an improvement by 2013. It's estimated that the property market in Dubai is oversupplied by around 25%, and the property price crash here is expected to be more than double that seen in the US.

Things aren't much better in Abu Dhabi which had initially fared much better during the economic downturn but is now facing its own oversupply of homes, as around 11,000 homes are expected to enter the market by the end of next quarter, according to a report by Jones Lang LaSalle. This is expected to cause prices to fall by another 14%, which would be 60% from their peak values. It is expected that the markets in both Dubai and Abu Dhabi will continue to adjust over the short term due to difficulties in financing mortgages and increased home supplies. This is also expected to affect rents as rental costs are predicted to drop by 8% in Dubai this year and by 5% in 2012. Rents in Abu Dhabi are expected to fall by 14% this year and by 10% next year.

Russia's Property Market Still to Make a Comeback

The property market in Russia underwent a huge boom between 2000 and 2007, and prices increased by around 436%, but property prices began to weaken towards the end of 2008 and to decline during the second quarter of 2009. House prices are still declining, even though the rate is slowing.

Although prices of resale apartments increased by 3.79% to the year ending the second quarter of 2011, when adjusted for inflation prices actually declined by 5.25%. In Moscow resale apartment prices fell by 5.38% after being adjusted for inflation, but in St Petersburg prices fell by a massive 15.23% after being adjusted for inflation.

Part of the problem is that the ruble has depreciated significantly against the US dollar, and was down from RUB23.36 in July 2008 to RUB35.82 in February 2009. This massive fall meant those who had already committed to buy or rent property had to raise around 50% more cash, putting pressure on the housing market which contributed to its crash in 2009.

By July 2010 the exchange rate had recovered somewhat and stood at around RUB30.76 to 1 US dollar, and according to the IMF the ruble is undervalued by up to 21% against the dollar and by 15% against the euro, and is expected to recover over the next few months to a year.

Private ownership of property has been allowed by citizens and foreigners since 2001 and since 2006 in Moscow, but Moscow has the dubious distinction of being amongst the world's most expensive cities for expatriates to live in.

Spanish Property Prices and Sales Are Finally Increasing

According to statistics from Kyero.com, which is Spain's largest English language property website, asking prices for property in the country has increased to €266,100 during the third quarter of 2011, and it looks as if there may be a shortage of quality properties in popular regions.

The country has experienced a tourism boom, and some hotels have seen 100% occupancy during the summer months, and this has led to increased interest from second home owners looking to rent out their property for at least part of the year.

Property professionals throughout Spain have seen an increase in enquiries and inspection trips, and certain areas such as Costa Blanca, Costa Calida, Alicante and Murcia are seeing respectable price increases.

Prices in Alicante began rising at the end of last year, with the average asking price of €220,000 in December rising to €231,000 in September. The region has enjoyed substantial investment into its infrastructure, and a second airport terminal was recently opened which should help attract more visitors, especially as prices are still below the national average.

Between April and June, Alicante saw its biggest ever number of sales to foreign buyers, but Malaga still took top place. It has been nominated as a candidate for the 2016 European Capital of Culture, and if it wins this will further boost tourism numbers and property sales.

The island of Mallorca still remains popular with visitors, and the average asking price is €416,300, which is the third highest average in Spain. The Spanish government has reduced VAT on new property until the end of the year, and this is also encouraging buyers to purchase now as it can save an average of €8000 on a €200,000 home.

US Shadow Homes Inventory Looks Set to Keep Prices Low

Hundreds of thousands of homes are either in foreclosure or have been repossessed by the banks, but have not yet come on the open market. There are already more homes for sale than people want to, or are able to buy, and with an estimated 1.6 million homes in the country's shadow inventory property prices are likely to remain depressed for years.

The states of Ohio, Georgia, Illinois, Florida and California have the largest shadow inventory is according to Realty Trac, which is a firm that tracks foreclosures and delinquent properties throughout the country.

Property prices in Ohio are down right across the state, and none of the areas seems able to maintain more than one month growth in prices, and it's not just affecting states with large shadow inventories, as Iowa had been largely unaffected by the boom and bust of the housing market, but is now beginning to see the negative effects of shadow inventory.

It can often take as long as a year before the banks get a foreclosure property on the market, and the likelihood is once it does sell it will be for a greatly reduced price.

According to Realty Trac, California has nearly 270,000 homes in its shadow inventory, while Ohio has nearly 70,000 homes. Apparently there are a couple of factors which are slowing down the resale of such properties, as legislators imposed a moratorium on foreclosures in 2009 as well as other delays, and lenders are increasingly seeking to keep homeowners in their property.

The value of the nation's shadow inventory has been estimated at $405 billion, and it's thought it will take at least four years to clear.

Sales of New Homes in the US Reach a Six-Month Low

Sales of new homes in the US have reached a six-month low, as even the largest price drops in two years failed to entice buyers away from distressed properties.

Sales fell by 2.3% to an annual rate of 295,000, and the median price dropped by 7.7% compared to August 2010. Developers are fighting limited access to credit and rising unemployment figures in addition to low foreclosure prices, and it seems likely that the building industry will not see a recovery in the short term.

The median sales price declined from $226,600 in August 2010 to $209,100 in August 2011, and purchases fell in three out of four US regions, with the North East registering a 14% drop. Sales in the Midwest rose by 8.2%. The supply of homes also increased to 6.6 months, up from 6.5 months in July.

In contrast sales of previously owned homes increased by 7.7% in August to reach a five-month high of 5.03 million annually, although the median price dropped by 5.1% compared to August 2010. Nearly a third of the properties were bought for cash while another third were made up of foreclosures and short sales.

Last week the Federal Reserve announced additional measures to increase growth and stimulate the property market, as it has been instrumental in every economic recovery since 1982 barring the current one. New housing starts fell to their lowest annual rate in three months in August, and the property market is still likely to be constrained by the current economic outlook and continuing weakness in the labour markets.