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/

Foreigners Snap Up $2bn in London Property in Christmas Week

Foreign investment in the London property market has been growing for 18 months, but never so fast as in the week before Christmas. In one week alone buyers from Asia, Africa and Europe bought £1.3 billion worth of skyscrapers, upmarket clothes shops and sprawling City office developments.

The surge of demand shows that London still retains its safe haven status even as the EU crisis worsens and there was talk of British isolation.

“Buyers are aware that now is a good time to come into the London market as many sellers are distressed or concerned about the impact of the eurozone crisis on future valuations,” said James Beckham, director of capital markets at Jones Lang LaSalle, the property services group.

The purchase of Tower 42 Nathan Kirsh, the South African property tycoon, from BlackRock and Hermes Real Estate, was the biggest and most noteworthy sale of the week. The tallest occupied skyscraper in the City and former headquarters of NatWest bank went for £282.5m.

The Malaysian government's investment arm Permodalan Nasional Bhd also made the noteworthy shortlist with its £350m office complex purchase. In its UK debut PNB snapped up the 460,000 square foot Silk Street Building just down the road from Tower 42.

It is not just prime office stock that has attracted overseas interest, however. A property investment vehicle backed by Ernesto Bertarelli, the Swiss-Italian pharmaceuticals billionaire, on Wednesday announced its first investment, acquiring a 186,000 sq ft mixed-used building in Mayfair in a deal rumoured to be worth more than £100m.

US Foreclosures Fall 14% in November as Lenders Freeze Evictions for Holidays

Just as the Germans and Brits played football on the battlefields across Europe on Christmas day, the US' banks are calling ceasefire on litigious battles as they suspend evictions and foreclosure proceedings for the holiday period.

According to real estate data collection agency RealtyTrac the widespread move brought a 14% decline in the number of foreclosures last month, with 224,394 properties receiving default notices last month. The number of foreclosures also declined on a monthly basis, with 1 in 579 households receiving foreclosure notices in November, compared to 1 in 563 in October.

The firm's chief executive James Saccacio said that the eviction moratorium is partially behind the numbers:

Despite the fall in filings the number of scheduled foreclosure auctions hit a nine-month high. Saccacio explained: "[The] first quarter typically is a better buying season, so you’ll see more of this inventory try to come to market.

"I expect 2012 to look similar to 2011 in volume if nothing changes with government intervention regulations."

With 1 in 175 homes receiving foreclosure notices in November, Nevada remains the worst affected state for the 59th consecutive month. California (one in 211) came second, while Arizona was third (one in 256).

Saccacio's prediction that 2012 volumes will be largely the same as 2011 has to be looked upon as disappointing and pessimistic. For America 2012 will be almost the 7th year of housing market collapse and still we are not to see any improvement? Optimists would say that the rapid rush of auctions in Q1 combined with the foreclosure moratorium will make a big space to clear a large chunk of foreclosure inventory in Q1, setting the way for the rest of the year. Time will tell who is right.

Russian Buyers Becoming Prolific in Overseas Property

During the boom Russians became prolific in the world of overseas property, particularly in Bulgaria, Ukraine and other coastal hotspots in the region, but also in Spain and the Med. They, like buyers from almost all nationalities became rare during the financial crisis, but according to many reports they are now becoming as prolific as ever.

According to aiGroup, who surveyed Russian investors at their three property shows between September and November, 71% of Russian investors are planning to complete a purchase in the next 3-6 months.

More than two thirds of Russian overseas property exhibition visitors are looking to complete a purchase in the next three to six months. Kim Waddoup, chief executive of the group said that exhibitors at his Moscow and St Petersburg property shows reported "stronger than ever interest in their properties".

The reports are confirmed by official data, which shows a surge in capital flight out of Russia into foreign assets and investments. According to central bank chairman Sergei Ignatyev has estimated $49.3 billion has left the country in the first nine months of the year, already outstripping 2010’s figure of £35.3 billion. $13 billion of capital left Russia in September alone…70% of the third-quarter total.

Turkey is a firm favourite among the new breed of investors according to other reports. International Residence surveyed 499 Russian investors at the Moscow International Investment Show in March this year, and found Turkey to be the third most popular country among those looking to buy. Spain and Bulgaria were first and second.

Worries over China's Property Market Overshadow Economic Prospects

Worries about a slowdown in China's property market are threatening to overshadow the country's economic prospects, according to the Organisation for Economic Cooperation and Development.

The report from the OECD stated that while the failure of small developers wouldn't pose a significant problem, this wouldn't be the case with larger developers who could put bank lending at risk. It identified a key risk as being an "overly quick liquidation of unsold property."

China is expected to see growth of 8.5% next year, even though exports will be affected by weakened demand and a decline in the nation's overall competitiveness.

According to the OECD the economy could be helped through government housing projects which would support the construction and moderate the effects of inflation, possibly allowing the government to cut interest rates from the middle of next year.

The vice premier of China, Li Keqiang has already announced the property market is entering a critical stage but feels restrictions on transactions should be maintained even though sales are declining. Latest figures show October sales fell by 25% compared to September and prices fell in 33 out of the 70 cities monitored.

The government has placed restrictions on mortgages and home purchases in around 40 cities and is also aiming to build 10 million affordable homes to boost supply. Some analysts are already predicting that falling property prices in cities such as Shanghai and Beijing could force the government to relinquish some of its hold on the property market. UBS is forecasting property prices will drop by between 10% and 15% in first tier cities in 2012 and by 5% to 10% in other cities.

US Births Hit an 11 Year Low, Affecting the Housing Market

  The birth rate in the US is at an 11 year low, and experts think decisions to delay having a family or forego having babies altogether may prolong recovery of the property market. The low birthrate will mean a lower rate of consumer spending on child related services and goods, and it's estimated the cost of having raising a child until the age of 17 is $226,920 with housing being one of the largest expenses.

Last year the number of registered births fell to 4 million which is the lowest level since 1999 as Americans worried about unemployment, falling house prices and low pay rises are lacking the confidence to plan for a new baby.

The US birthrate may not recover until 2013, and is likely to lead to slower economic growth. It’s being predicted that the employment rate will increase by 2.6% during the fourth quarter and that economic growth will be too weak in 2012 but to make much of an impact on the jobless rate.

Economists think the impact of a slowing birthrate could be huge as they point out households will choose to rent for longer periods of time, and there will be fewer people looking to move up the chain. Recently there have been signs of a pickup in the economy, and if this continues it could lessen the impact.

Consumer confidence improved in November and is at a four-month high, and retail sales increased by 0.5% last month. Claims for unemployment insurance have also dropped to their lowest level since April, which is a pretty good sign that the labour market may finally be recovering.

Hong Kong Property Market Sees Weaker Sentiment Last Month

The Hong Kong property market was a little weaker last month due to continuing problems in the Eurozone and in the global economy. In October potential homebuyers proved reluctant to commit to purchasing flats, and tighter lending conditions continue to make it more difficult to obtain mortgages.

These conditions resulted in home sales falling by 3.7% last month to reach their lowest level since February 2009. The luxury end of the market saw sales fall more steeply, as just 268 luxury homes worth more than HK$10 million were sold, a fall of 15.2% month on month.

Sellers also became more willing to listen to offers, with property being sold for an average of 10% less than the asking price. Prices of mass residential property fell by around 2% in October, but prices of luxury homes fell by just 0.5% as only homeowners short of cash were willing to sell at a discount.

Newly launched projects were received relatively well, as one developer saw 40 units sold within the first three hours of the launch.

The rental market was relatively quiet as this is the low season, and landlords were willing to negotiate on rents, with luxury rents falling by 1.9% compared to September.

Experts think the outlook for the Hong Kong property market will depend on the global economy, and the effects of the Eurozone prices have already begun to be felt as exports declined by 3% year-on-year in September, for the first time in two years. However they are predicting that any price corrections will be minimal unless the sovereign debt crisis in Europe worsens considerably.

2011 Likely to Be another Bad Year for New Homes in the US

At the start of the year there were hopes that 2011 would see the property market in the US turning around, but instead this year looks likely to be less than memorable for the construction industry.

The number of new single-family homes constructed this year is expected to be around 424,000, which is a reduction of 10% on last year and 5% on 2009 which was the worst year on record since 1959.

It was anticipated that this year would see the beginning of a slow turnaround for single family home building as this particular sector has seen heavy job losses during the last five years, but optimism has gradually faded as the economic situation failed to improve.

Nationally house prices have continued to fall, and were down by an average of 4% in August compared to August last year, according to the Standard & Poor Case Shiller index, and fear of falling prices has kept buyers away.

This year has also seen the formation of fewer new households, with levels at just a third of those seen in 2007 to 2009. Consumer confidence has plunged with people becoming more uncertain about investments.

Many experts think the number of single family home sales will increase next year, with 2013 seeing an even bigger jump, but some are questioning the need to build extra homes as the US already has an oversupply. The latest data from the Federal Reserve Board shows banks continuing to ease lending standards on all types of loans apart from those secured on real estate.

Increasing Numbers of Hong Kong Homeowners Are Falling into Negative Equity

Increasing numbers of Hong Kong homeowners are falling into negative equity, with the estimated number of mortgages underwater rising to 1,653 at the end of the third quarter compared to just 48 three months earlier, with loans worth $528 million.

This increase provides clear evidence that prices in Hong Kong are declining, and experts expect them to fall even further, especially with the risk of a global economic slowdown. The number of home transactions has fallen for 9 straight months, and prices declined by 3% between June and August. There are grim predictions that property prices may fall by as much as 30% by 2013, and the number of loans in negative equity is now at its highest level since the second quarter of 2009. However it's nowhere near as bad as the peak of 106,000 which was reached at the end of June 2003 at the end of the six-year slump which saw property prices decline by up to two thirds.

During the past year the government has implemented a number of cooling measures in response to the public outcry over price increases of up to 70% since early 2009. It has raised the minimum deposit required on some mortgage loans and has increased land sales in an effort to ease the shortage of new apartments which has partially been caused by an increase in buyers from other parts of China. Mortgage rates have also increased five times since March. While falling into negative equity is obviously bad news for these homeowners, it is good news for others who may find property prices finally becoming within reach.

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.

New Zealand Farm Property Is Selling Well

Sales of New Zealand farm property are at their highest level for nearly 2 years, and according to the latest report from the Real Estate Institute of New Zealand, this trend is likely to continue. A total of 1,003 farms were sold in the year ending August 2011, and this is the first time since October 2009 that more than 1,000 farms have been sold annually.

Although this figure is only slightly above 1,000, the Institute thinks it indicates an underlying trend due to farmer returns remaining good, while commodity prices are expected to hold or increase as the season gets underway.

A total of 265 farms were sold in the three months up to August, which is an increase of 38% on the same period last year, but is a 12% reduction compared to the end of July.

Sales of dairy farms are quite low which is seasonal, even though there is good demand for high-quality grazing, and in general most farm types are seeing sustained interest, and all but one region has recorded an increase in sales compared to August last year.

The median price per hectare has declined from $16,968 in August 2010 to $15,148 for August 2011, but experts expect the prices to remain reasonably constant and sales to increase.

The number of lifestyle properties sold in August decreased compared to May, but is still well above last year's figures as 1,304 properties were sold during the three months ending in August, up from 1,066 during the same period in 2010. The median price declined from $453,000 to $444,000.