Danish Property Market Could Get Worse Before It Gets Better

The property market in Denmark could get worse, as property values are dropping, the jobs market is growing, and private levels of debt are high. House prices in Denmark have declined by 25% since their peak in 2007, and the government has predicted prices will fall by a further 5.5% this year.

In March, property values fell by an annual rate of 8.6%, according to Statistics Denmark, so at least the decline is slowing. Unemployment is being predicted to rise to 7.6% this year, up from 7.4% last year according to the Organisation for Economic Corporation and Development.

According to Moody's, this combination of factors has left many households vulnerable. It estimated private debt levels reached 142% of GDP at the end of 2010. This rate is twice the European Union average of 79%.

Moody's has downgraded nine Danish financial institutions, and the financial crisis has claimed five banks since 2011. In spite of this Denmark is still one of only 12 nations to hold its triple A rating, and has emerged as something of a safe haven due to its fiscal discipline.

Denmark has a current account surplus, and last month the government cut the budget deficit target to 3.8% this year, and 1.7% for 2013. In comparison the average deficit in the European Union is 3.6% for 2012, and 3.3% for 2013.

Although Denmark is being seen as a safe haven, Moody's is cautioning investors against assuming it's immune from the debt crisis in Europe. It points out that although Denmark still has its own currency the Danish banks and economy is exposed.

The Danish economy is relatively strong in comparison with other countries in Europe, and this should mean household debt levels decrease in the future.

Peruvian Property Market Continues to Perform Strongly

The property market in Peru has been performing strongly for a couple of years, and this is largely due to strong economic growth in the country. In 2010 GDP grew by 8.8%, while in 2011 it grew by 6.9%.

According to figures from Peru Tinsa, the average price of homes sold in the Lima metropolitan area increased by 19.9% last year to reach $99,449. Residential sales increased by 52.2% in 2011 compared to 2010, and there was a 31.57% increase in the area sold.

All the indications are that the property market will continue to perform strongly this year due to lower mortgage rates, the strong economy, and improved public investment. Most of the new developments are concentrating on higher end property, but the best-selling homes in Lima are priced between $30,000 and $50,000.

By January this year Peru had seen 29 consecutive months of economic expansion, as GDP was up 5.38% compared to the same period last year, and is predicted to grow by 5.7% this year. Much of this increase is due to the strength of the Chinese economy, as the demand for raw materials such as copper is huge.

Peru has made sure that its export market remains competitive, as the Central Reserve Bank of Peru has intervened to make sure the currency doesn't appreciate too much. Last year saw the inauguration of Ollanta Humala, as the 94th president of Peru, and though there were initial concerns as to how he would lead the country, it seems as if he is following the same democratic and highly successful path as the Brazilian president. This means he is dedicated towards modernising the economy while maintaining a strong social commitment.

Property Prices in the Ukraine Rise Unexpectedly

Property prices in Kiev, the capital of the Ukraine rose unexpectedly during the year ending April 2012, but experts are doubtful as to whether this increase is sustainable, especially as the economy is slowing down. During the last year the average price of an apartment in Kiev increased by 28.9%, but is still 30% less than the peak of the housing boom in 2008.

In November last year property prices rose by 25.7% year-on-year which was something of a surprise as they had declined for nearly 3 years. However prices declined during the following months. The housing boom in the Ukraine took place between 2005 and 2008, and was mainly due to strong economic growth and interest from foreign buyers.

The boom was encouraged by the President, and as a result property prices increased by more than 1000% between the second quarter of 2000 and the second quarter of 2008. Between 2000 and 2007, GDP grew by an average of 8% annually.

Most of the properties bought by foreign buyers were purchased by Canadians, Kiwis, British, Emiratis and Cypriots, as well as some Americans. Properties were also brought by wealthy Ukrainians, and the average price rose to well above anything that could be afforded by the average resident. In late 2008 this foreign demand dropped off sharply due to the global crisis.

Domestic demand also decreased as Ukraine's main export is steel, and the need for this commodity collapsed. As a result GDP contracted by 15% in 2009. Since then the economy has expanded by 4.1% in 2010, and 5.2% last year. The Ukraine is quite an attractive proposition, as the economy is in relatively good shape, and the cost of buying a property is low. Ukraine also has the advantage of having good rental yields, and the laws are in favour of landlords.

Property Investors Becoming Increasingly Interested in Italy

According to a recent report, property investors are becoming increasingly interested in purchasing homes in Italy, and the current climate is especially good for British investors due to the strength of the pound against the euro.

Last year Umbria and Tuscany were especially popular amongst international buyers, and the regions saw increased activity. Most of the buyers were from the Eurozone, from Luxembourg, Belgium and the Netherlands. This year is likely to see something of a reversal due to the decline in the Euro.

During the last year or so the number of buyers looking for property in Italy has increased substantially, although prices of luxury homes in Tuscany and Umbria dropped by nearly 5% which is thought to be due to the weak global economy, and the Eurozone debt crisis.

Most international buyers are interested in luxury properties priced between €5 million and €15 million, as well as those at the lower end of the market price between €500,000 and €1.5 million. New properties coming onto the market are being priced accurately which is increasing buyer confidence, as well as helping to promote these areas as being some of the best residential property markets in Europe.

Tuscany and Umbria have traditionally always been popular amongst the British, and property in Umbria tends to be slightly cheaper than Tuscany. However Chianti is becoming increasingly popular as it is a picturesque rural area. Other areas attracting interest include Florence and Val d’Orca. Property prices in Italy are expected to remain largely stable this year, and there's no chance of a property glut as new developments are tightly regulated so demand will be higher than supply.

Hong Kong Property Market Looks As If It's Cooling

It looks as if the Hong Kong property market is cooling, as the government recently sold land for less than the estimated value, in spite of it being in one of the most exclusive areas in the city. The 42,000 ft.² of land is situated near Repulse Bay Road, and was sold for HK$1.67 billion, although estimates had expected the land to be sold for HK$1.68 billion.

It's likely low-rise apartments will be built on the site, and could cost about HK$44,000 a square foot during the next couple of years, while new units in the area currently cost between HK$35,000 and HK$40,000. Repulse Bay is one of the most exclusive areas in the city, and is home to some of the richest inhabitants. It was developed around the site of the Repulse Bay hotel which was built in the 20s and demolished in the 80s, and which featured in several famous films.

In July Leung Chun-ying is due to take over as the leader of Hong Kong, and has already pledged to increase the housing supply in a city where property is among the most expensive in the world. Since the beginning of 2009, property prices have increased by more than 78% which is due to a lack of supply and low mortgage rates.

During the first quarter of this year, prices of luxury homes fell by 2.2% due to mortgage restrictions imposed by the government on properties costing more than HK$10 million reducing demand. Property in Hong Kong is around 55% more costly than London.

Residential Property Sales Accelerating in New Zealand

The rate of residential property sales in New Zealand has been accelerating over the last four consecutive quarters, as during the second quarter of last year, sales increased by 7%. By the following quarter this had increased to 18%, and during the final quarter of last year property sales grew by 22%.

This rate of growth has continued into the first quarter of 2012, with sales growing by 29%. This last quarter’s sales growth equates to 3,969 more properties being sold during this period, compared to the same period last year, or 44 properties per day.
This rate of growth hasn’t been matched by the pace of listings, as these have grown by just 10% during the first quarter of this year. This lag in listings is quite common and is being seen all around the country, and it’s not unusual for it to take up to six months to catch up.

While sales may be increasing, so are prices, and New Zealand is one of the most expensive places in the world to buy property, when income is taken into account. The Demographia International Housing Affordability Survey found the average property in Auckland cost 6.4 times the average annual salary in the city, compared to 6.2 in New York, and 5.7 in Los Angeles.

The problem isn’t just confined to Auckland, as property prices in Christchurch are 6.3 times the average income, while in Dunedin prices are 5.2 times the average income, and are 5.1 times the average income in Wellington. This unaffordability is reflected in the fact that less than 30% of those aged 40 or under own or partially own the property in which they live.

Now is a Great Time to Buy Property in France

According to French estate agencies, now is the perfect time to by
property in the country. Prices have fallen by as much as 40% in some
areas and are now at very realistic levels. Property prices have
stabilised over the last few months, and the lower end of the market
is especially buoyant. This makes it an excellent time to buy holiday
homes, or even permanent homes for those looking to relocate as there
are still plenty of bargains around.

A budget of €100,000 is sufficient to buy a perfectly habitable
two-bedroom bungalow in Brittany, while properties that need a
complete renovation can be picked up for as little as €30,000.
Brittany is the perfect location for a holiday home, as it is very
accessible for short breaks, and enjoys a stunning coastline.

At the moment estate agents have a substantial number of
properties for sale, right across France. While certain areas such as
Provence are always popular, they are not always so quick to access
for short breaks, as that easy commute can involve several hours
drive after getting off the ferry. This can quickly become expensive
and time consuming, and can mean that holiday property is only used
for a few weeks a year.

British interest in French property has been steadily increasing
over the past few months, and some estate agents are forecasting
prices could rise by several percentage points this year. It’s also
become easier to get financing from French banks, as they are still
willing to lend on second homes and investment properties.

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