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.

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.

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.

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.

Rising Prices in Bangkok Increase Demand for the Suburbs

Property prices in Bangkok are increasing rapidly, and now that the sky-train has been extended to the East and West sides of the city, many foreigners are choosing to escape the city and are looking towards less crowded areas in the suburbs.

Many are choosing to buy middle and lower priced homes outside the city in suburbs such as Thon Buri and Bang Na. The attractions of these two suburbs include the fact that Thon Buri has relatively few high-rise buildings, while in Bang Na there are several good international schools.

The suburbs of Bangkok are undergoing something of a population boom, as the number of residents has increased by more than 30% during the last decade. In spite of this massive increase the population density is still an incredible 800% lower than the inner-city, and according to the National Statistics Office this equates to 1,086 people per square kilometre, compared to 8,780 people per square kilometre.

The top two districts for population expansion are Bang Bua Thong and Bang Yai, where the population increased by 85% and 107% respectively which is largely due to the government’s plan for extending the MRT Purple Line.

It's expected that the property market in Bangkok will continue to remain hot, as the city is likely to become a hub within south-east Asia. The number of foreign tourists visiting the country grew from 15.93 million arrivals in 2010 to 11.17 million during the first six months of this year. This number is expected to increase to over 30 million tourists annually once the Asean Economic Community is formed in 2015.

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.

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.

Aftermath of the Earthquake leads to building boom in Japan

The aftermath of the earthquake is likely to lead to the biggest housing boom in Japan for at least 15 years. Japan's second-largest house builder, Sekisui House Ltd is set to focus its attention on building new homes locally after concentrating much of its efforts into overseas housing markets such as Australia and China over the last three years.

The company had decided to target countries that are dealing with increasing population, good economic growth and rich resources as the housing market in Japan was damaged by falling wages and increasing unemployment.

New housing starts in Japan fell to less than 1 million units in 2009 and 2010 which is the lowest level for four decades, but now demand is expected to exceed that of 1996 when 1.6 million new homes were built after the Great Hanshin Earthquake.

The Japanese Prime Minister is proposing a ¥4 trillion budget to help rebuild homes destroyed and damaged by the earthquake and subsequent tsunami. There is also a proposal that the government should raise taxes to pay for this extra spending, but experts feel this would hurt the economy and could jeopardise the revival plan.

After the last earthquake in 1996 housing starts increased for 10 months, but the area damaged in March is much larger and the need is much greater. There are about 30.3 million homes in Japan, and 90% have not yet been assessed for quake resistance. An estimated 0.4% of the 29,692 homes built by Sekisui in the area of the Hanshin earthquake were destroyed and 9.3% were just slightly damaged.

The chief executive officer of Sekisui, Isami Wada announced the company's intention to continue building more earthquake resistant homes that help give people peace of mind and security.

Chinese banks increase reserve requirements

Chinese banks have increased their reserve requirements in order to restrict the flow of cash and cool inflation, and the central bank governor Zhou Xiaochuan has said that monetary tightening will continue for some time.

The reserve ratios are due to rise half a point pushing the requirement to 20.5% for the biggest lenders and this latest move comes just two weeks after interest rate increases. It's hoped these measures will prevent banks from lending aggressively in the next month.

It also seems likely that another interest rate increase may come as soon as next month after figures showed inflation accelerating at its fastest pace since 2008.

The policymakers in China may also consider allowing the Yuan to appreciate more quickly in order to reduce the cost of imported products including oil.

The US in particular thinks the Chinese currency is undervalued and there are expectations that it will rise about 2.3% during the next 12 months. The US Treasury secretary Timothy F.

Geithner has said that a stronger currency would help to counter inflation within China and would also help to reduce economic imbalances that have contributed to the global financial crisis. The Yuan has increased in value by 4.5% against the dollar since last June, which was when the Chinese scrapped their policy of keeping the currency unchanged against the dollar.

The Yuan is close to becoming included in the International Monetary Fund's Special Drawing Rights basket, and this should help China overcome inflation. However some officials feel that the SDR basket should be broadened to not only include China but also the currencies of Russia, India, South Africa and Brazil.

Thailand's Property Market Finally Slowing Down

According to estate agent Brett Gordon, founder of Panna Capital in Hong Kong, the property market in Thailand is slowing down after a year of spectacular growth.

The Bank of Thailand's Economic Conditions Report released in January showed sales in Bangkok reached 178,128 in 2010, up from 161,240 in 2009. However on January 1 2011 the central bank raised the loan to value ratio.

The loan to value ratio for condominiums costing less than 10 million baht is now 90%, while the ratio for low rise properties will be 95%, applicable to purchase contracts dated on or after January 1, 2012.

Brett Gordon sees this as a sensible move although there are concerns being raised in a report from CB Richard Ellis that limitations on foreign ownership in Thailand could do long-term damage to the market.

This effect is already showing quite clearly in the Bangkok property market as it didn't gain any real income or have any significant property deals during the last quarter of 2010.

The report from CBRE went on to say that although there are concerns about the influx of foreign capital into Thailand the restrictions mean that the property investment market remains largely the domain of domestic buyers.

However the threat of a property bubble in the condominium market has subsided due to decreased demand and a reduction in supply.

For his part Brett Gordon sees the retail sector in Thailand as being the most interesting, in particular the small listed retails. He feels that the dominance of large listed retails in the country has reached its maximum.

Australians Finding Value in US Property Market

Australians are viewing the US as a good property investment opportunity, but real estate experts are cautioning investors to do their research before making an investment.

Australia has a strong dollar and the US property market has an abundance of foreclosures on the market. With median prices being much lower in the US, Australians are tempted to make overseas investments to enrich their portfolios.

The median house price in Perth, Australia is $465,000 and in the US is $210,000. With the falling rate of home ownership in the US, the market is peaking the interest of international investors.

According to Leigh Gavin, head of property research at Frontier Investment Consulting, for every 1 percent that home ownership rate falls, it equals about 1.1 million households.

In the last year, about $600 million dollars have come in from Australian investors into the US property market. Some are even paying for investments that they have never seen. This may not be wise though, if the area that the properties are being purchased are not in attractive areas. The potential for loss in the future is greater if the area is run down or in a high crime area.

Some experts are advising that investors look into multi-family housing and some companies are available to assist overseas investors find and purchase such housing for as little as $10,000. Multi-family housing is booming in the US due to Generation Y’s reluctance to purchase their own homes with the economy the way it is.

In Australia, yields on apartments are about 2-3 percent, but in the US yields are about 5-6 percent. The US property market is expected to continue to see slow recovery this year, as more and more people begin to show interest in purchasing homes once again.

PWC Declares American Property Market is in Recovery Mode

PricewaterhouseCoopers has declared from a recent report that the property market in America is in the mode of recovery and investors are the ones who are really leading the way. From all the reports over the last couple of years, this latest report seems to be the most encouraging, as the data indicates that confidence is returning to property investors.

According to data from the PwC Real Estate Barometer, the commercial real estate market is doing considerably well and will continue as long as confidence among businesses and consumers continues. The office and multifamily housing sector are expected to show positive signs of recovery by the end of this year.

The retail sector is not expected to do quite so well this year, but experts believe that next year will begin to see more recovery. There are some inflation fears and consumers are not spending as much right now, but investors are beginning to have more interest in distressed retail properties, as they believe it is a good time to purchase now before the market stabilizes.

Surprisingly, the luxury retail sector is showing signs of recovery, as people with a great deal of money are not afraid to spend it at this time. Some are surprised, but the retail sector is doing better than many expected, as many thought the boost wouldn’t come till at least the year 2013.

With the commercial real estate sector doing so well, and the retail market beginning to show small signs of recovery, experts believe that the increase in transactions will give the economy the added boost it needs.

Growth Predicted in US Commercial Property

According to a recent report by PricewaterhouseCoopers LLP, the United States commercial property sales are expected to increase within the next few years, as more and more property investors gain confidence in the market as a whole.

According to this quarterly survey, job growth, as well as higher business and consumer optimism, are encouraging purchasers to get into the market now with the interest rates where they are. By waiting, interest rates could increase, as well as push prices up in the office, industrial, multifamily, and retail sectors.

Everyone is awaiting recovery of the real estate industry, and as confidence grows among investors, the better will be the results for the industry. The long wait has caused some investors to become more eager to get back in there.

According to an index from the Massachusetts Institute of Technology Center for Real Estate in Massachusetts, commercial real estate prices surges 19 percent in 2010. Estimates from real estate experts believe that commercial property transactions could increase up to 40 percent this year, to $135 billion.

Additonally, the PricewaterhouseCoopers report stated that with low interest rates and stiff competition among buyers, the chances of getting good returns on investments are favorable. In 27 of 31 office markets, capitalization rates decreased.

It is estimated that within the next two years, most industrial markets will improve, with 86.2 percent expected to be in recovery by 2012 as demand surges. With supply and demand becoming more balanced, vacancy rates should decrease and the rental industry should increase.

The multifamily sector has been doing quite well due largely to more challenging lending restrictions and limited home buying opportunities. As a result, demand for apartments have increased and are expected to continue for the next couple of years.

http://www.bloomberg.com/news/2011-03-21/deal-volume-to-drive-u-s-commercial-real-estate-recovery-pwc-survey-says.html

Germany's strong recovery continues as economy bounces back

Germany's economy is recovering extremely well as it expanded by 3.6% last year, and while this was partly to be expected from such a deep recession it was also due to carefully implemented government measures. These measures ensured that unemployment was kept at its lowest level since 1992 which has ensured a feeling of prosperity in the country with business confidence at its highest level for 20 years.

Germany has always been very good at keeping its public finances under control and it had the added advantage of not experiencing any credit or property bubble, and it has also concentrated on keeping export levels high. Its central geographic position also enabled it to take advantage of cheaper labour from eastern European countries increasing the efficiency of firms. One of its biggest export markets is China as luxury German cars are in high demand, as is machinery for Chinese factories.

While the economy may be booming house prices in Germany are still surprisingly affordable especially when compared to similar properties in the UK. There have been indications in recent months that the property market is beginning to benefit from continuing consumer confidence and that the strong economy is drawing in new investors. The continued recovery has also meant that the construction of new homes has begun once more although anyone choosing to invest here should regard it as a long term prospect. The fact that a high proportion of the population choose to rent rather than own makes this country extremely attractive for buy to let investors.

Kenyan property still good investment

The Kenyan property market has survived the recent downturn reasonably well with prices still rising albeit more slowly than during the property boom of the last decade. It is now lower-cost housing that is proving most popular, and there is also a change in the way property purchases are being funded. As the economic recovery has taken place there has been an increase in the number of mortgages being taken out whereas properties used to be bought for cash.

This increase is due to a policy implemented by the Central Bank of Kenya which reduced interest rates and in turn triggered a large decline on returns on government bonds. This forced financial markets to look for some other form of income which led to them to begin promoting mortgages especially to middle income professionals. There is no doubt that the mortgage market has huge potential in a country where just 16% of the population own their own homes, but the increase in mortgages has also amplified the shortage of housing especially for those on lower incomes.

This shortage is attracting investment in several forms as there has been an increase in direct foreign investment in property projects, as well as interest from foreign private equity firms and pension funds. This increase looks likely to spark further building projects to increase the housing stock in an attempt to meet growing demand as more and more Kenyans want to get onto the property ladder. It's highly likely that in the short to mid-term the demand for housing will continue to outstrip supply as the economy continues to improve and the availability of mortgages gets better.

Slovakia property market bottomed out

As Slovakia continues to recover from the economic downturn house prices appear to have bottomed out, and are down 15.8% from their peak prices. Property increased in value here from 2006 to 2008 with rises averaging from 14% to 35% annually. Although prices appear to have bottomed out consumer demand is still weak and may be affected by rising unemployment levels.

During the downturn in the economy contracted by 4.7% but is now recovering as it grew by 3.8% during the third quarter in 2010. Interest rates in Slovakia are quite favourable as they declined throughout 2010; however the banks remain cautious about lending. A new government was elected in June 2010 and is expected to be good news for the economy as it has promised to return the country to the high growth rates it previously enjoyed and has also pledged to reduce the budget deficit.

At its highest point the economy grew by 10.58% in 2007 and is estimated to have grown by 4.1% in 2010. While analysts believe the outlook for Slovakia is good they do not think that property prices here will increase rapidly, but that the growth will be slow and sustainable. Rental yields on property here are also quite low as although the system used to be rent-controlled it was abolished in 2005 but the decree was never implemented. It remains to be seen if the new government is willing to tackle such a sensitive issue.

Slovakia was formerly part of Czechoslovakia and is considered a very stable and liberal economy having undergone eight years of reforms under the centre right coalition which was led by Mikulas Dzurinda. These reforms earned it international praise and undoubtedly helped smooth its entry into NATO and the EU.