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.

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/

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.

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.

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.

Property Prices in Malta Fall for Second Consecutive Quarter

According to an index compiled by the Central Bank of Malta, property prices in the country have declined for their second consecutive quarter, falling by 2.6% in the three months to March. The prices of advertised property have also dropped by 2.6% year-on-year during the first quarter of this year compared to an annual rate of 2% during the previous quarter.

Apparently this fall was largely due to lower asking prices for terraced houses and for properties which are classified as being "other" properties, which includes houses of character, villas and townhouses.

Prices of terraced houses have fallen for three consecutive quarters, declining by 6.1% year-on-year, while prices for properties considered to be in the "other" category have declined by 12.8%.

However prices of apartments which account for almost three fifths of properties surveyed, increased by 1% compared to a year ago. The number of properties advertised for sale during the first quarter of 2011 decreased by 9.9% compare to a year earlier.

Although this news may seem gloomy, the Central Bank is still predicting economic growth to be 2.5% this year, compared to 3.2% last year when the economy rebounded strongly.

Investment spending was also strong in 2010, and is predicted to grow by 10.2% this year, with much of it being due to government investment in infrastructure and non-dwelling private investment.

Exports are predicted to grow by 5.5% this year, and all this positive news is expected to ease unemployment rates. Unemployment is predicted to decline to 6.4% this year which is pretty respectable.

Overseas Investors Increasingly Interested in Memphis Property

According to one estate agent in Memphis, Tennessee, the city has seen a raft of overseas property buyers looking for cheaper investment opportunities, and the company feels this is down to the government's willingness to help foreign businesses. The government of Memphis and its civic leaders has been working over the last couple of years to improve the image of Memphis, emphasising that it is a world class city. It looks as if their efforts have been paying off, and a number of foreign-based companies have recently announced their intention to relocate facilities to Memphis.

Memphis is increasing its appeal to investors from Canada, Europe, Asia and Australasia, and the local estate agency admits it was caught unawares by the increased interest, as the majority of foreign investors tend to stick to known tourist destinations such as Florida or Las Vegas. It looks as if it is attracting investors who are looking for a lower cost investment which will produce positive cash flow and long-term stability, and the fact that Memphis is becoming well known as a business city, also helps considerably.

Now estate agents in the city are hoping to adapt to the new needs of international investors, and are learning to cope with different time zones and different cultural, legal and language barriers. At the moment foreign investors make up around 7% of all US home sales, so it is an important part of the market. However this particular Memphis estate agent believes that foreign investors will account for 20% of all sales during the fourth quarter of 2011 into the first quarter of 2012, and has plans to increase this percentage next year.

Standard & Poor Predicts Further Price Drops in Gulf Region

A gloomy report from Standard & Poor predicts that property prices and rents in the Gulf region will continue to fall for the rest of the year. The agency thinks that developers will continue to postpone projects in favour of renting out and managing current stock, and it went on to say that it expects to see a shift away from luxury property towards more affordable housing, and that this will be particularly pronounced in Saudi Arabia.

According to a credit analyst for the ratings agency, prices and rents will continue to decline for the rest of the year, even though some of the properties in Qatar, Bahrain and the UAE have lost up to 60% of their value.

Apparently part of the problem is that the legal and regulation framework in these countries needs to be reformed to help stimulate the property market. Another problem is that the markets are oversupplied, and even though some people want to buy they cannot afford these luxury properties and cannot obtain finance.

The property market in Bahrain and Egypt is expected to remain slow, at least in the short term, which is due to the protests earlier in the year, and a considerable number of projects have been delayed or even cancelled.

Construction isn't expected to restart on any major scale until the political situation has stabilised, and the proper authorities are put into place to issue permits, licenses and property titles. There is also the possibility that property firms in the Gulf region may eventually adopt a real estate investment trust status, as at the moment REITs are relatively rare in this area.

US Property Market Finally Shows Signs of Stabilising

According to the second-quarter real estate market report from Zillow, the property market in the United States may finally be showing signs of heading towards stabilisation.

Although property prices have fallen by an average of 6.2% in the majority of markets, these falls have been slowing, with the last quarter showing just a 0.4% decline, the smallest for more than four years.

Some property markets are showing price increases, and negative equity has declined slightly. However economists are predicting that the bottom of the market won't be realised until next year due to the high numbers of foreclosures and continuing uncertainty over the economy.

Overall property prices have fallen by around 28% since their peak in June 2006, and the average property costs $171,600. The rate of foreclosures is gradually declining, as in March it reached a peak of 21.4% of all sales, while in June this figure fell to 19.7%.

Although property experts acknowledge this is good news they are still cautious about the future, and feel the road to recovery will not be particularly smooth. This is due to the fact that there are still a lot of foreclosures in the pipeline, and many people still have high levels of negative equity which could put their homes at risk in the future.

Some property markets have now shown two consecutive quarters of appreciation, and these include Washington DC where property prices increased 0.2% through to the first quarter of the year, and 1.7% through the second quarter. In the Pittsburgh prices increased 0.1% through the first quarter of the year and 2.8% through the second quarter.

Nicaragua Is a Great Destination for Investors Seeking a Bargain

Nicaragua is the largest country in Central America, and much of the southern Pacific Coast is being developed with luxurious planned communities designed specifically for overseas buyers.

While these developments are absolutely gorgeous, the Northern and Central Pacific Coast offers a far more affordable alternative, and many investors are catching on fast.

A lot of the towns here are quite simple, but are undergoing gradual transformations and the percentage of holiday homes is increasing. One such village is Pochomil whose most significant claim to fame is the substantial number of excellent seafood restaurants on the beach which is wide and sandy and about 10 miles long.

The Pacific Ocean here is extremely calm and warm, and is perfect for swimming and other water sports. This village is near to a luxury resort at Montelimar, and is also close to the former presidential seaside retreat. The nearest large city is the capital of Nicaragua, Managua, and many of its residents choose to escape here for day trips.

At the moment prices here are still very low as a three-bedroom property with ocean views can be bought for as little as $150,000, and the village has attracted a real international mix. Unlike the planned communities along the south Pacific Coast, this region has retained its authentic feel.

As well as being an attractive country for second homeowners, Nicaragua is increasingly being seen as offering opportunities for foreign direct investment, and is often regarded as one of the most competitive sourcing options for the textile industry, even when compared to countries such as Vietnam, China and Bangladesh.

Nicaragua has a skilled labour force and is very pro-business offering attractive fiscal incentives, and is likely to see good economic growth over the next few years.

Property Prices in Australia Fall Unexpectedly

Property prices in Australia are continuing to fall, as new figures for June show they have now declined for three straight months. One index showed that property prices in eight major cities dropped by 0.1% during the last quarter, and they are now at their lowest level since 2009. However the price falls in some cities were much larger, as property prices fell by 1% in Perth, and by 1.6% in Darwin. They are still continuing to rise in some cities as they increased by 0.4% in Sydney, and by 1.1% in Canberra.

Australia currently has the highest interest rates in the developed world, at 4.75%, although it has just been decided to keep rates the same for another month in spite of worries over high inflation figures. Rates have been increased seven times between October 2009 and November 2010.

The number of permits to build new homes, or to renovate existing houses and apartments fell by 3.5% from May, and building approvals have fallen by 15.5% year on year to June. This was unexpected as economists had been predicting a 3% increase in approvals during June, and a 10.3% fall for the year. Some analysts are taking the view that a fall in building approvals is good for house prices and should ensure that there aren't any real significant price drops in the future.

In spite of these gloomy figures, the medium to long-term outlook looks good, as economic growth is expected to boost the housing sector. There is a strong underlying demand for new homes, as around 135,000 units are built when there is a need for 200,000 new homes annually.

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.