It was fun to get swept up in the reports that the US housing market had bottomed, and indeed that is what mounting evidence seemed to suggest. However, the latest round of data has really knocked the stuffing out of any hopes that we are in recovery.
The Commerce Department found that new build home sales fell sharply in June. According to the report signed contracts to buy new homes fell 8.4% from the previous month, according to the U.S. Commerce Department, although they are still up 15% from a year ago. Sales levels are now at their lowest since January.
Sales of existing homes slipped 5.4% in June to an annual rate of 4.37 million units and are down 2.6% in the second quarter (4.537 million units). Combined sales of new and existing homes fell 0.4% to an annualized rate of 4.9 million homes, following three consecutive quarterly gains.
Meanwhile the rental market remained positive, with the residential rental vacancy rate falling to 8.6 per cent from 8.8 per cent in the January-March period, the commerce department said on Friday. The second-quarter reading was the lowest since 2002.
It can still be hoped that the strength in the rental market will lead to recovery in the wider market, especially as builders break more ground on multi-family housing projects. On that note, the home ownership rate edged up to 65.5 per cent in the second quarter, from 65.4 per cent in the previous quarter, the commerce department said.
Of course, the strong rental market continues to be good news for foreign investors in the US property market, and foreign investors needn't particularly care about a recovery in the wider market as long as their properties are earning good rents. That said, if the recent run of positivity wasn't the recovery then one wonder when is the US market going to recover. However, June's data could yet come to be seen as a blip on the upward trajectory of recovery – time will tell.
View property for sale in America
Saturday, 28 July 2012
Saturday, 21 July 2012
Mumbai Property Market Grinds to a Halt
According to the latest Knight Frank report, the property market in Mumbai is seeing low levels of activity. There are fewer apartments and homes being put on the market as sellers wait for conditions to improve. Buyers are also being put off by increases in building costs, and some of the better neighbourhoods are seeing vacancy rates as high as 48%.
Between 2011 and 2012 just 45,000 apartments were sold in Mumbai's metropolitan region which is well below the market average of 80,000 units a year. There is a current inventory of 80,000 flats, but many buyers are choosing to wait and see believing prices will drop in the near future.
Since the peak of the market in 2007 sales have dropped by more than 60%, and by 35% from 2011. Normally this decline in sales would have brought about a price correction, but this hasn't happened as a delay in approvals has ensured the market equilibrium is maintained. The fall in the number of units launched has offset the impact of prices.
So far this year just 55,000 flats have been launched which is a decline of many 40% compared to the 92,000 units launched in 2011. Developers are choosing to actively delayed project launches, and to sell current inventory before launching any fresh product to help ease any downward pressure on prices. Many developers simply cannot afford to cut prices as the costs of land, raw materials and labour have risen substantially, eating into current operating margins of 30% to 35%.
Between 2011 and 2012 just 45,000 apartments were sold in Mumbai's metropolitan region which is well below the market average of 80,000 units a year. There is a current inventory of 80,000 flats, but many buyers are choosing to wait and see believing prices will drop in the near future.
Since the peak of the market in 2007 sales have dropped by more than 60%, and by 35% from 2011. Normally this decline in sales would have brought about a price correction, but this hasn't happened as a delay in approvals has ensured the market equilibrium is maintained. The fall in the number of units launched has offset the impact of prices.
So far this year just 55,000 flats have been launched which is a decline of many 40% compared to the 92,000 units launched in 2011. Developers are choosing to actively delayed project launches, and to sell current inventory before launching any fresh product to help ease any downward pressure on prices. Many developers simply cannot afford to cut prices as the costs of land, raw materials and labour have risen substantially, eating into current operating margins of 30% to 35%.
Sunday, 15 July 2012
Foreign Investors Losing Love for Singapore, or Maybe their Bottle
Singapore is seeing fewer foreign investors, and this is at least partially due to the stamp duty recently imposed on overseas buyers. Developers who are willing to absorb at least part of the stamp duty are continuing to see sales.
The increase in stamp duty was one of several measures imposed by the Singapore government in order to curb sales to foreign investors as there work concerns that housing was becoming too expensive for residents. By the time these measures were in place the international sales market had already quietened down due to the global economic situation, and the introduction of additional taxes has only cooled the market down further.
During the first quarter of this year property values in Singapore fell for the first time in three years, according to data from the government. Property prices at the higher end of the market fell by 0.9% compared to the previous quarter.
Prices are expected to continue to decline for the rest of this year due to the number of properties currently on the market. Although these price declines are minimal, they are in considerable contrast with the price increases seen over the past few years, as Singapore has seen the largest price gains in the world.
Between the fourth quarter of 2006 and the fourth quarter of 2011, property prices in Singapore have risen by 50.5%. The only areas to see larger price increases are China, Hong Kong and Israel. In 2007 the price increase for Singapore was an incredible 33%. Singapore is desirable as it is seen as being a relatively transparent market, especially in comparison with other Asian cities. The percentage of foreign buyers increased from 11% in 2005 to 17% in 2011.
Wednesday, 4 July 2012
Draft Mortgage Law Approved in Saudi Arabia
A draft mortgage law has just been approved in Saudi Arabia, and will allow mortgages to be sold in the kingdom. It is hoped this will help address one of the most critical issues in the Saudi Arabia which is the shortage of housing.
Saudi Arabia is a country of 27 million people, and the majority are under the age of 30. There is a huge lack of affordable housing, and limited finance options to help young people get onto the housing ladder. This new law should help bridge that gap, and will also boost revenue to banks. According to Jones Lang Lasalle, demand could be for between 150,000 and 200,000 units a year, but it's thought the banks are well equipped to cope with this level of demand.
The law has been a long time coming, as it has had to deal with a number of sensitive issues such as how to deal with the homeowner if they default on their mortgage. These types of issues have to be dealt with in an Islamic sharia compliant manner.
Apparently the draft of the new law includes various measures to ensure the safety of the financial system, while making sure the transaction is fair. Some home loans do already exist in Saudi Arabia, and payments are deducted from salaries as soon as they enter bank accounts.
However this is the first time a product can be secured against the property, allowing the borrower to benefit from owning such an asset. According to the Saudi Arabian Monetary Agency, the regulation of the new mortgage sector will be undertaken by the central bank in Saudi Arabia.
Saudi Arabia is a country of 27 million people, and the majority are under the age of 30. There is a huge lack of affordable housing, and limited finance options to help young people get onto the housing ladder. This new law should help bridge that gap, and will also boost revenue to banks. According to Jones Lang Lasalle, demand could be for between 150,000 and 200,000 units a year, but it's thought the banks are well equipped to cope with this level of demand.
The law has been a long time coming, as it has had to deal with a number of sensitive issues such as how to deal with the homeowner if they default on their mortgage. These types of issues have to be dealt with in an Islamic sharia compliant manner.
Apparently the draft of the new law includes various measures to ensure the safety of the financial system, while making sure the transaction is fair. Some home loans do already exist in Saudi Arabia, and payments are deducted from salaries as soon as they enter bank accounts.
However this is the first time a product can be secured against the property, allowing the borrower to benefit from owning such an asset. According to the Saudi Arabian Monetary Agency, the regulation of the new mortgage sector will be undertaken by the central bank in Saudi Arabia.
Saturday, 30 June 2012
Demand for Homes in US Rises More Than Expected in May
The demand for new homes in the United States increased more than expected in May, and mortgage rates have dropped, helping boost the residential property market. This is just as well as other parts of the economy are cooling. Purchases for May reached an annual rate of 369,000, which is the highest since April 2010 and is 7.6% more than the previous month.
The number of houses on the market is steadily reducing. It's likely that the reduced cost of borrowing will help boost buyers' confidence. The Federal Reserve recently extended a program designed to keep long-term interest rates low with the aim of reducing unemployment and preventing a global slowdown from stalling the property market.
The median sales price has increased by 5.6% compared to the same month last year to reach $234,500, and prices have increased since February which is the best performance in five years. Purchases rose by 37% in the North East, and by 13% in the South, but demand dropped by 3.5% in the West, and by 11% in the Midwest.
Last month there were 145,000 newly constructed houses on the market, up slightly from the record low of 144,000 recorded for March and April. The supply of new homes on the market dropped to 4.7 months, which is the lowest since October 2005. Due to growing demand builders broke ground on 516,000 single-family homes in May, up 3.2% from April. Although economists are optimistic about the latest news, they still caution that there is a long way to go before the market returns to anything sort of normality.
View American property for sale
The number of houses on the market is steadily reducing. It's likely that the reduced cost of borrowing will help boost buyers' confidence. The Federal Reserve recently extended a program designed to keep long-term interest rates low with the aim of reducing unemployment and preventing a global slowdown from stalling the property market.
The median sales price has increased by 5.6% compared to the same month last year to reach $234,500, and prices have increased since February which is the best performance in five years. Purchases rose by 37% in the North East, and by 13% in the South, but demand dropped by 3.5% in the West, and by 11% in the Midwest.
Last month there were 145,000 newly constructed houses on the market, up slightly from the record low of 144,000 recorded for March and April. The supply of new homes on the market dropped to 4.7 months, which is the lowest since October 2005. Due to growing demand builders broke ground on 516,000 single-family homes in May, up 3.2% from April. Although economists are optimistic about the latest news, they still caution that there is a long way to go before the market returns to anything sort of normality.
View American property for sale
Saturday, 23 June 2012
Canadian Residential Property Sales Declined in May
Canadian residential property sales declined last month, and were
down by 3.1% compared to April, according to data from the Canadian
Real Estate Association. This is the first monthly decline since the
beginning of the year, but activity levels were still slightly above
the five and 10 year averages for May, showing the housing market is
still in reasonable shape.
The average price for a house sold last month was $375,605. This
is a 0.3% decline compared to May 2011, and although the national
average has remained pretty flat since last spring, sales prices have
increased in seven out of ten local Canadian markets.
Toronto is still Canada's most active housing market, and property
is selling quickly, but sales and average prices are also up in
Calgary compared to May last year. In comparison the rest of the
market in Canada has seen only modest growth, and market conditions
remain balanced. The number of newly listed homes has changed little
during the past three months, and listings were up just 0.3% compared
to April.
The number of new listings for the month was static in 49 markets,
and eased in 52 markets. The new listing to national sales ratio,
which is a measure of market balance, was 53.4% in May, slightly down
from April when the reading was 55.3%. National inventory levels were
at 5.9 months at the end of May, which is a slight increase on
April's 5.7 months. Experts consider housing supply and demand in
Canada to the balanced.
down by 3.1% compared to April, according to data from the Canadian
Real Estate Association. This is the first monthly decline since the
beginning of the year, but activity levels were still slightly above
the five and 10 year averages for May, showing the housing market is
still in reasonable shape.
The average price for a house sold last month was $375,605. This
is a 0.3% decline compared to May 2011, and although the national
average has remained pretty flat since last spring, sales prices have
increased in seven out of ten local Canadian markets.
Toronto is still Canada's most active housing market, and property
is selling quickly, but sales and average prices are also up in
Calgary compared to May last year. In comparison the rest of the
market in Canada has seen only modest growth, and market conditions
remain balanced. The number of newly listed homes has changed little
during the past three months, and listings were up just 0.3% compared
to April.
The number of new listings for the month was static in 49 markets,
and eased in 52 markets. The new listing to national sales ratio,
which is a measure of market balance, was 53.4% in May, slightly down
from April when the reading was 55.3%. National inventory levels were
at 5.9 months at the end of May, which is a slight increase on
April's 5.7 months. Experts consider housing supply and demand in
Canada to the balanced.
Friday, 15 June 2012
Property in South-East Asia Set to Boom
According to Jones Lang LaSalle, the property markets in Southeast
Asia could begin to boom. The firm believes there are several factors
which will influence the markets, including growing affluence and
urbanisation in these countries, which will result in an increased
demand for housing as well as commercial property and infrastructure.
In addition this should lead to increased tourism both from within the region and outside, and it's expected there will be considerable demand for property in developing countries such as Laos and Myanmar. here should also be an increased demand for hospitals and clinics, as more these affluent societies begin to focus on improving health.
Education is another sector expected to see increased demand, as there will be an additional need for schools and colleges as well as the associated housing and infrastructure.
However Jones Lang Lasalle has pointed out changes will need to be made to land ownership laws in order to encourage investment. This means there will be a need for increased transparency and professionalism within the property sector. At the moment there are a number of differences between the countries regarding foreign property ownership, and these need to be managed more efficiently in order for opportunities to be maximised.
Economies such as Laos and Cambodia have only recently opened up, and although there are numerous business opportunities investors need to feel confident about conducting transactions in such countries. If these difficulties can be ironed out then the property market can develop more quickly, and more money can be invested into countries in South-East Asia.
In addition this should lead to increased tourism both from within the region and outside, and it's expected there will be considerable demand for property in developing countries such as Laos and Myanmar. here should also be an increased demand for hospitals and clinics, as more these affluent societies begin to focus on improving health.
Education is another sector expected to see increased demand, as there will be an additional need for schools and colleges as well as the associated housing and infrastructure.
However Jones Lang Lasalle has pointed out changes will need to be made to land ownership laws in order to encourage investment. This means there will be a need for increased transparency and professionalism within the property sector. At the moment there are a number of differences between the countries regarding foreign property ownership, and these need to be managed more efficiently in order for opportunities to be maximised.
Economies such as Laos and Cambodia have only recently opened up, and although there are numerous business opportunities investors need to feel confident about conducting transactions in such countries. If these difficulties can be ironed out then the property market can develop more quickly, and more money can be invested into countries in South-East Asia.
Subscribe to:
Posts (Atom)