International Real Estate News and Update

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North America

Mexico – Mexico has a huge housing shortage with 9 million families in need of suitable housing. The economic downturn started later in Mexico than it did in the U.S. and since the beginning of 2011 many sellers have begun accepting offers 25% below their asking price. The government provides developers with subsidies and buyers with access to mortgages from the state agency, which provides up to 70% of the country’s mortgages.

Canada – The Canadian housing market remains healthy as record low mortgage rates and relatively affordable home prices continue to attract buyers. The housing market has seen a strong recovery since 2009, forcing the government to tighten credit rules to prevent the market from overheating.

Latin America

Argentina – In the last three decades, the supply of housing in Argentina has not kept pace with demand. As a result real estate prices in Buenos Aires continued an increase of approximately 10% from January 2010 to January 2011.

Brazil – An epic real estate boom continues its course in Brazil. But as prime acreage prices across the country and especially those in Rio de Janeiro reach historic highs, some in the sector are questioning whether this is a thriving surge or an unsustainable bubble, especially in light of the fact that Brazilian currency is widely considered overvalued.

 Chile The Chilean housing market and economy in general has remained strong despite the global financial crisis. There was no subprime crisis in Chile, no bubble with artificially inflated values; banks didn’t give mortgages to unqualified people.

Europe/Eastern Europe

England – The outlook remains uncertain, but with the UK economic recovery expected to remain sluggish house price growth is likely to remain soft in the period ahead with prices moving sideways or drifting modestly lower.   Over the next 12 months prices will fall 1.5% per year through 2015.

France – Housing prices outside of the Paris region were broadly stable but with substantial regional differences. Prices fell in 16 regions and the volume of sales is going down. The overall outlook is, at best, price stability.

Germany – Germany did not experience the property booms and its property values have been spared while most Western European markets are experiencing the end of their property growth cycles. Germany is at the beginning of theirs, although renting is still the norm. The middle class is becoming increasingly more affluent, demand for single and small family homes is growing while at the same time the population is shrinking.

Italy It is basically a two-tier market – high and low end – with opportunities in each. Only 3% of Italians between the age of 18 and 24 manage to live alone or as a couple — the lowest rate in the EU.  Rents are high and places are hard to find. If you’re a family needing a house it’s even tougher — that’s why some 25,000 people also move out of Rome each year and into the surrounding countryside.

Spain The residential market is showing no signs of recovery in the midst of an oversupply coupled with high unemployment and a lack of government subsidies and financing that is stalling the market.   One of the major causes of the poor performance in the market is the steep decline in the price of resales, where prices have plummeted, partly because of the large number of newly constructed homes in the country.

Russia – Russia had a massive housing boom from 2000 to 2007 with housing prices skyrocketing on average over 400%. Property prices started to weaken in late 2008 and the Russian housing market hasn’t recovered yet.  Resale apartment prices actually fell about 5% when adjusted for inflation. One of the priorities of the Medvedev government is to move its citizens from apartment blocks to single-family homes. Over 77% of the country’s 142 million citizens live in apartments.

Asia

ChinaChina’s real estate market’s cooling home prices continue to fall as developers start to cut prices to boost sales amid the government’s housing curbs. China is ramping up development of so-called “social housing” for lower-income households. It has targeted 10 million units for this year alone, and 36 million by 2015. China’s economy however remains strong and is expected to only slow modestly with 9% GDP growth in 2012.

IndiaThe numbers are all moving in the wrong direction for developers in Asia’s third-largest economy. Debt levels are rising as house sales volumes and profits fall. Banks are shutting their doors to the real estate industry just when it needs cash the most. Prices are stagnant and expected to fall, pouring cold water on the roughly $6 billion worth of planned initial public offering from developers.

JapanStepping somewhat aside from the direct effects of the earthquake and tsunami, the country has two major systemic problems that are affecting the real estate market: a population that is ageing and political instability.  The real estate market will have to bide its time.

Hong Kong – Hong Kong’s property market, which was red-hot for the greater part of the past eighteen months, is showing some signs of cooling. The number of property transactions in Hong Kong fell to a 30-month low in July and the competition among property developers to acquire land parcels from the government also dwindled. In addition, the number of transactions has slowed dramatically; down 40% the start of the year.

Singapore – Prices have been rising in all segments of the market as historically low interest rates mean extraordinarily cheap mortgages: some buyers can get teaser rates of below 1%. The boom has also been pushed along by rich foreign buyers; 16% of private units are now bought by outsiders. The government has been trying to dampen things by targeting speculative transactions amid concerns that asset bubbles are forming as home prices surge.

Australasia

AustraliaWith data showing that national house prices have been falling for the last seven months it is anticipated that by June 2012 prices in Melbourne, Brisbane and Perth will be as much as 15% lower than 2010 peaks. The Economist recently ranked the Australian real estate market as the most over valued in the world, estimating that the ratio of house prices to rents is 56% above its 1975 to 2010 average.

New ZealandThe property market continues to show signs of confidence and heightened activity as compared to the past few years. The data point to a gradual recovery, posing no fresh implications for the Reserve Bank of New Zealand’s rate policy.

Africa & Middle East

Israel - Price escalation in the housing sector has also added to inflationary pressures. Israel has the third highest residential property price growth rate in the world; residential property prices in Israel increased in Q1/11 by more than 7% year-over-year. The government has enacted a number of measures to cool activity in the residential market, including tax initiatives, to make it more expensive for investors to buy residential property, as well as other measures to accelerate the sale of apartments and to encourage new construction.

EgyptEgypt’s Ministry of Housing has promised one million new affordable homes by 2015 in 22 cities across the country, designed to help meet the needs of a flourishing, expanding, young population. The need for residential property continues to grow as does the need for business and retail space.

South AfricaHouse prices increased during the years 2000 to 2007 by more than 250% and ended with the global financial crisis in 2008. After 12 interest rate cuts, prices started surging again in 2010. After the World Cup, property prices growth has slowed and shows only a modest projected rise in 2012. However, allowing for an anticipated 6% inflation house prices will actually show a decline.

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