Residential property market in Hong Kong remains strong

According to a report from Jones Lang LaSalle, the property market in Hong Kong remains strong in spite of a slowdown in sales volume. The report points towards low interest rates, limited space availability, corporate expansion and strong consumption as the reason for this continued growth.

The Hong Kong government imposed cooling measures over the last year, and this led to an initial slowdown in sales growth during the first six months of 2011. There were a total of 55,200 sales and purchase agreements during the last six months, and this is 16% less than the previous year, but with the number of transactions averaging 9,200 per month, this level is still considered to be healthy.

There were 1,260 transactions for property valued at HK$20 million or more, during the first six months of this year, and although this is 33% less than the last six months of 2010, it is still 7% more when measured on a year on year basis.

The total of these transactions was HK$59.4 billion which is 20% less than the second half of 2010 but 11% more year-on-year. In fact the capital values of luxury property has increased by 16.2% this year, and rents have gone up by 4.9% which is mainly due to demand from corporate expatriates.

The overall price of residential properties has increased by 10.1% this year, and this increase is mainly due to higher household incomes and a lack of available housing. Sales of new properties have slowed as just 4,700 new units were sold between January and May, while 13,600 units were sold during the previous 12 months. Experts expect sales volumes to remain low for this year, but don't see any real market risks.

US banks easing terms on risky loans

Two of the largest US banks, the Bank of America and JP Morgan Chase, are helping borrowers by easing their mortgage terms or cutting their debt, and some of the grateful recipients are not even in default.

One lucky borrower received a letter last year from Chase telling her the amount she owed on her condominium would be cut in half. Her loan was for $300,000, but she wasn't in default, and although she didn't understand quite why they have chosen to do this she certainly wasn't going to turn down such a lucrative offer. However the offer was deliberately vague, and upon acceptance the interest rate was raised to around 5% so repayments remain roughly the same.

Before this offer was made this particular property owner was in negative equity, and as such was far more likely to be at risk of foreclosure as anyone in this position is more likely to move away to take a job than anyone who has a financial stake in the property.

Apparently banks are overhauling loans for borrowers who have pay option adjustable rate mortgages which were taken out in the late stages of the property boom, as these are viewed as potentially causing future problems. This type of loan allows borrowers to forgo making the principal payment and some of the interest payment for an introductory period which can last several years. The extra interest and monies owed are then added to the loan.

Although there are many homeowners who could desperately use this kind of assistance, the lucky few chosen to receive this help are often suspicious as to the motive. In March economists at the Federal Reserve wrote a paper saying they could find no real evidence that any lender is actually reducing principal on mortgages.

Holiday Home Buyers Advised to do Research

This is the time of year when many people holidaying abroad are tempted by the thought of owning a holiday home, and a few will go ahead and make their purchase without fully considering the consequences.

A new report from Smart Currency Exchange advises would be second home owners to approach this transaction in the same way as any other business or commercial transaction. This is especially true at the moment where many people are being tempted to buy abroad by the abundance of bargains in places such as Florida, Spain and Portugal.

One thing that Charles Purdy, Director of Smart Currency Exchange advises is to always have an exit strategy, as circumstances can change quite rapidly sometimes, and a lot of people may be forced, or may choose to return to the UK. One thing that people should always check is the year round weather, as some places which seem idyllic during the summer months can be anything but during the winter. Some of the amenities may shut during the low season, and there may be far fewer flights.

He advises people to rent for a few months or a longer before making their final choice, and to do their research thoroughly as to any future developments which may affect their property. Getting good legal advice is also essential, and it is worth paying extra to ensure it is independent. Buying a property overseas can be a life changing experience, but research is essential to ensure it is a positive life choice.

Chinese government is successful at avoiding property bubble

It looks as if the Chinese government has been successful at avoiding a property bubble as prices during May fell in 23 out of the 70 cities surveyed, up from 16 in April.

Prices of existing homes in Beijing fell by 0.2% from April while property in Shanghai registered a 0.2% increase. Prices of new homes increased in 67 out of the 70 cities. The Chinese authorities are determined to prevent a bubble, and on June 14 the authorities ordered banks to hold more money as reserves, as it continues to fight inflation.

The government measures work better on existing homes as they restrain purchasing power, whereas developers of new properties are in no rush to slash prices, and are watching to see how government policies will develop.

The prices of new homes in the larger cities such as Beijing slowed last month, as much of the government's efforts have been focused on the largest urban areas. However a total of 29 cities posted increases of more than 5%, even though this is down from 33 cities in April.

Prices of new homes in Beijing have increased by 2.1% while Shanghai homes increased by 1.4%. The smaller cities such as Lanzhou, Mudanjiang and Urumqi all posted much larger gains of at least 7.7%.

Standard & Poor cut Chinese developers outlook from stable to negative on June 15, and it's likely that property sales will slow as the government policies really start to kick in. The credit rating company thinks that as prices may be 10% lower in the next 12 months.

Experts predict a long, slow struggle for US housing market

Experts are predicting that the American housing market will take a long time to return to any sort of normality, due to the huge number of foreclosures and empty homes, while the proposed 20% minimum deposit threatens to limit the number of buyers able to get on the property ladder.

The vice-chairman of the US Federal reserve, Janet Yellen, has said that the recovery will be long and drawn out, and that the Fed must work hard with other agencies to help clear the current stock of vacant properties and to prevent further foreclosures.

There were around 2 million vacant homes during the first quarter of this year, and the inventory of unsold property is likely to stay high for quite some time, increasing the downward pressure on house prices.

Americans are still having considerable difficulty getting finance, and the Federal Reserve is now trying to persuade lenders that all mortgages should meet higher underwriting standards as an alternative to foreclosure. Robert Shiller, the US economist responsible for the Case Shiller index predicts that house prices could fall by a further 10% to 25% during the next five years.

A minimum 20% deposit has been proposed by six federal regulators, but angry critics say this will prevent a large percentage of the population from ever buying their own home, condemning them to rent for ever.

There are worries that the only people who will be able to get mortgages in the future will be the very wealthy, with other potential buyers being either excluded or charged higher rates.

Property prices are still falling in Cyprus

Property prices are still dropping in Cyprus, and the asking price of homes has fallen by 25% in the last 18 months. Even these huge discounts are not sufficient to attract buyers, as the only property is being sold are those regarded as being real bargains.

The price drops are being blamed on a combination of factors including the global recession, the problem with title deeds and stricter lending conditions. Apparently banks have cut the number of mortgages by as much as 50% as they are too scared to lend. Of course some properties were simply priced too high for the market and a correction was inevitable.

It's not all gloom and doom, as some experts remain optimistic about the future of the property market, and feel that certain places have just fallen out of fashion, while those nearer the sea or with good views are holding their value. Properties in Paphos had been particularly badly hit, but there are signs that the market may be picking up here, as large numbers of Russians are choosing to buy property here as Paphos is seen as a quiet, beautiful and safe location.

British buyers are still in short supply, although some Cypriots are taking advantage of the low prices to invest in property. The story isn't much better for the rental market as a villa which would have previously been rented for €600 a month will now rent for €500, but there are hopes that improved tourism figures may help boost the property market. Revenue for tourism was up 53.5% in April.

Investors Eye up Singaporean Industrial Property

Industrial property in Singapore has been forecast to outperform residential, office and retail property over the next few years. Cushman and Wakefield reported that capital values for industrial properties increased by up to 22% in 2010, and the vice-chairman, Donald Han, expects a healthy 15% increase this year. He feels that as long as the economy and manufacturing sector continues to expand the market could enjoy another two years of steady capital values and rental increase.

Demand for industrial property has increased due to the government cooling measures which have forced speculators to move from expensive residential property to the more affordable industrial properties.

Industrial property is currently costing around US$240-US$280 per square foot which means a reasonably sized unit of 1000 to 1500 ft.² would cost less than US$400,000. This compares very favourably with the cost of residential property as this amount would not buy much more than a shoebox.

Although prices of residential property rose sharply last year, analysts are currently hedging their bets about which way the market is heading as the government measures begin to take full effect. Most agree that prices cannot keep on rising so steeply, even though the most recent data shows that prices are still below pre-global financial crisis levels.

The prices of residential property rose by 2.1% during the first quarter of this year which is slightly down from the 2.7% growth recorded in the last quarter of 2010. Prices have now increased for seven straight quarters, although the number of sales is slowing.