US Foreclosure Figures Fall but It's Too Early to Celebrate

Data just released by Lender Processing Services shows the number of new foreclosures fell by nearly 40% last year, but this is largely due to the robo signing scandal, and the numbers defaulting on their mortgages last year remain more or less unchanged.

The figures found a significant difference between those states that required foreclosures to go through the courts compared to those that don't and found that foreclosure sales in states where no judicial action is required are four times higher than those states where cases are required to go through the courts.

RealtyTrac’s figures for the third quarter of last year show that foreclosure properties accounted for one fifth of all sales, down from 22% in the second quarter and 30% year-on-year.

The average price of foreclosure homes was $165,322 during the third quarter of last year which is around 34% below the price achieved by homes not in foreclosure. This average sales price had increased 1% quarter on quarter, but was down 3% year-on-year.

Until a settlement is agreed between multiple states attorneys general and major lenders the market won't be able to dispose of foreclosure properties properly. California's attorney general has just rejected the latest proposal, saying it is inadequate.

Without California's agreement the value of the settlement could drop by billions of dollars as around one fifth of the country’s foreclosures are in California. During 2005 and 2006 foreclosures typically accounted for less than 5% of all property sales throughout the country, so even though figures have fallen they still remain historically high.

Residential Property Sales in Hong Kong Fell Last Month

In December last year, residential sales in Hong Kong fell to their lowest figure since November 2008. Sales fell by 10.3% month on month to just 4,301, and this is thought to be due to a combination of factors including many people travelling abroad over the Christmas holidays and uncertainty over the global economy.

The luxury sector fared worst of all with sales falling 32.9% to 466. Total sales of residential units last year fell by 40% year-on-year to just 84,462. However sales of new property fared a little better with developers choosing to price their properties competitively, and individual projects received good responses.

Sales of existing property haven't fared so well, and owners have had to become more flexible over pricing. Owners are being forced to take reductions of around 15% below market value in order to secure a sale within a reasonable time period.

The rental market was definitely affected by the holidays with landlords choosing to lower rents to secure tenants rather than leave property empty, and as a result of this, luxury rental values decreased by 2.5% month on month.

Experts think that the current slow progress over a solution to the European sovereign debt crisis will continue to hinder residential sales.

Sales and rental values for luxury property are expected to fall during the year. Many international companies in Hong Kong are affected by events in Europe and the US, and will be looking to cut accommodation costs for employees, and will also be looking to cut rental costs of offices. Last month saw many companies choosing to move to less expensive locations in order to cut operating costs.

Investors See Scandinavia as Safe Haven from Euro Debt Crisis

Investors are looking towards Scandinavia in the wake of the Euro debt crisis, but this area isn't immune from risk as some experts are predicting there could be a property bubble forming. Sweden is currently paying less than Germany to borrow for 10 years, and government bond yields in Norway are at a record low.

In spite of this Robert Shiller, who helped create the S & P/Case Shiller home price index feels both countries could be at risk of asset bubbles which could damage their economies, and is warning that policymakers should do more to protect their property and credit markets from imbalances.

House prices in Norway have doubled from 2001 to 2010, and the annual increase last month was a more than respectable 8.5%. Household debt is predicted to increase to 204% of disposable income this year which is the highest level since 1988.

According to the International Monetary Fund, homes in Sweden seem to be overvalued, making price falls likely. Values have tripled during the past 15 years, although house prices fell by 2% last quarter having reached a peak which resulted from tax cuts, low rates and a strong economy.

At the moment both Norway and Sweden may seem to have little to worry about as both have still retained their triple A rating, and the Swedish housing minister, Stefan Attefall doesn't appear concerned, feeling the boom is at least partially driven by a shortage of housing. Both countries are rated as being extremely low risk, with Norway offering the lowest risk while Sweden is the third lowest after the US.

Hong Kong's Property Market Predicted to Remain Slow This Year

Recent figures from one of Hong Kong's largest real estate agencies, Centaline show property transactions hit a five-year low totalling just 108,814 properties which is 33% less than a year earlier.

This is the lowest number of transactions since 2006 when a total of 99,087 deals were recorded. Last year the Hong Kong government imposed higher stamp duty levels, increased taxes and auctioned off land in order to boost supply and regain some control over prices, as the city is regarded as having one of the world's most expensive housing markets.

The government imposed these measures in order to curb speculators from profiting, but now experts think they are hurting the housing market. Not least because mortgage rates are rising and the global economy remains weak.

At the moment prices have only fallen by around 5% since their peak in June 2011. The fall is mainly due to owners being reluctant to sell and transactions are set to remain low in 2012. In December 2011 just 4,301 units were sold which is a reduction of 54% compared to December 2010.

Analysts think prices will largely remain flat, but could fall by around 5% to 10% this year if the Eurozone crisis worsens and government controls remain in place.

Over the last couple of years property prices in Hong Kong have increased dramatically due to a combination of wealthy buyers from mainland China and low interest rates, leaving many ordinary buyers unable to afford inflated prices. This is a situation which unsurprisingly hasn't sat well with many of the city's 7 million residents.

Road to Recovery Remains Bumpy in the US

Although consumer confidence is growing the property market still faces a long road to recovery with prices down 3.4% in October 2011 compared to October 2010 according to the latest Standard & Poor's Case Shiller home price index.

During the spring and summer prices were showing signs of stabilising or even increasing, so these recent figures are a bit of a blow. Experts think they probably result from increased foreclosures, as during the summer months foreclosures slowed due to concerns over paperwork. Mortgage companies have now resumed their foreclosure activity which is forcing prices downwards.

Those buyers who can afford to wait are still choosing to sit on the fence, especially with expectations that prices may still fall a little further. A recent survey by Zillow showed that most housing experts believe prices will continue drifting downwards until the end of the year at least, due to several different factors.

One of these is the problem of negative equity as it is estimated around 22% of homeowners now have mortgages which are greater than the worth of their homes and they are unlikely to be able to afford to move and buy another property.

Foreclosures are still a problem and 6 million homeowners were late with their mortgage payments or were already facing foreclosure by the end of the third quarter. Continued distressed sales can only force prices downwards.

One of the worst performing metropolitan areas remains Atlanta where prices declined by almost 12% year-on-year with foreclosures accounting for much of this loss. Out of 20 cities just two were able to report positive gains with Washington and Detroit showing gains of 1.3% and 2.5% respectively.

Portugal Property: Who Needs Sales When Rental is Booming

I had to laugh (well, not laugh but you'll know what I mean) at the latest report into the Portuguese property market by the Royal Institute of Chartered Surveyors. The report basically breezed over the fact that all indicators were negative, because it is also reporting on a rental boom. It says:

"The October RICS/Ci Portuguese Housing Market Survey (PHMS) shows a further deterioration in demand, supply, confidence and prices". Demand, supply, confidence and prices; all indicators are negative, but, as it goes on to say, the scuttled property sales market is fuelling a rental boom across the country.

"[The rental market] appears to be benefiting from ongoing weakness in the sales market. At the national level, demand for rented property and new lettings instructions both increased sharply, though rents declined. Respondents expect further falls in rents but continued strong rises in lettings volumes."

It is likely no coincidence then,that this is the first RICS Portugal index, which is done in conjunction with Confidencial Imobliario, to cover the rental sector as well as the sales sector.

I feel a little bit sorry for Portugal. It never really had a boom, and there was certainly no bubble, but when the crash banged, Portugal popped just like the rest of us. Its public debt levels are now a noose around its neck as it struggles to find a way back to growth. There are bargains for sale in the country, but few have the confidence to buy until the Euro crisis is resolved/