Global Real Estate & Economic News from Propertyshowrooms.com

House prices rise in Mallorca and Ibiza

Tue, 21 May 2013 11:08:22 GMT

Although Spanish property has come under the spotlight for the wrong reasons recently, finally some good news has emerged from the country.

Valuation company Tinsa has reported that the Balearic and Canary Islands both experienced price rises in April 2013 compared to the previous year.

Both regions experienced an increase of around 3.3 per cent compared to the average 10.5 per cent property price decline seen across the rest of the country.

Commenting on the figures, Daniel Chavarria Waschke, managing director of Balearics Sotheby’s International Realty with offices in Mallorca and Ibiza, said, “This is consistent with the market predictions we posted in January this year when we stated that we had started 2013 with a real sense of positivity.

“We made reference to the fact that Ibiza had its recovery in 2012, way ahead of the mainland, and was already ‘booming out’ again.”

The earlier report by Balearics Sotheby’s International Realty also stressed that demand for property in Mallorca had remained strong throughout the crisis due to the fact non-Spanish buyers accounted for more than 80 per cent of sales.

Mr Chavarria Waschke said that the firm predicted the worst was over for Mallorca last year.

“Our crystal ball appears to be spot on with April’s 3.3 per cent house price increase reflecting that recovery. Long may it continue.”

He added that it is unfair to judge Spanish property by the performance of Spain as a whole given that significantly different local markets experienced in Mallorca and Ibiza.

The report by Tinsa revealed that property prices across Spain have fallen by 37.2 per cent since they were at their peak in December 2007. However, the bulk of this drop is attributed to the mainline Mediterranean coastline which has seen house prices drop by 45.1 per cent, with falls of 40.4 per cent seen in the capital and major cities.

By contrast, the Balearic and Canary Islands have seen falls of 24.5 per cent in the past five and a half years, with a more positive short term outlook.

Now is the time to buy Australian property

Mon, 20 May 2013 18:28:54 GMT

Now is the time to get on the Australian property market, according to an entrepreneur from the country.

Speaking to over 3,000 estate agents at the Australian Real Estate Conference on the Gold Coast, John Symond predicted that the property market will return to confidence after the federal election and move quickly after September.

He said that the “bottomed out” house prices combined with the historically low interest rates created the ideal environment for a property market recovery.

"If you want to pick a time to get into housing, you can't get a much better time than now,” he explained.

"We have the lowest interest rates on record, which may even go a little lower, and we have seen the housing market bottom, while there is evidence right around Australia that prices are increasing."

Mr Symond inspired the delegates with tales of how he had bounced back from near-bankruptcy so found his company the Aussie Home Loans Business.

He suggested that the only missing ingredient from the property market recovery is confidence, but was bullish that optimism would return after the election later this year.

"First-home buyers are now able to borrow money at five per cent, that's a better incentive than any grant," Mr Symond said.

"Pricing today is very attractive when you compare it to the last ten years and affordability is the best its been for many, many years - and that's the best time to get into housing."

His comments follow a report by The Economist which found that Australian property prices rose by just 2.6 per cent in the past year to March 2013. This makes it the tenth best performing property market in the world out of the 18 measured.

Hong Kong, Brazil, South Africa and India were some of the nations ahead of Australia in the chart.

Last year the country appeared 18th out of the 21 best performing housing markets as rated by the magazine.

Nevertheless, Mr Symond stressed that property should always be a long term investment and not a “quick kill” option, given the propensity for the markets to boom and bust.

Property sales drop off in Cyprus

Fri, 17 May 2013 13:46:14 GMT

Property sales have reached record lows in Cyprus, thanks to current economic conditions. Figures from the Department of Landlords and Surveys showed that just 285 contracts of sales were deposited at the Land Registry in April - the lowest figure on record, Cyprus Property News reported. Conversely, in April 2012, 461 contracts were deposited at the Land Registry. This equates to an annual decline of 38 per cent.

Of the sales completed last month, 59 per cent were done on behalf of domestic buyers, while 41 per cent were deposited by overseas investors, according to the newspaper. This indicates that despite the state of the Cypriot property market, interest is still high among foreign buyers. Paphos appears to be at the centre of activity, with overall sales actually increasing by seven per cent year-on-year. However, this is the only ray of light in an otherwise bleak April.

Transaction numbers fell in all districts, Cyprus Property News revealed. Nicosia experienced the greatest losses, with a 71 per cent decline, followed by Limassol (-41 per cent), Famagusta (-38 per cent) and Larnaca (-29 per cent). The price drops are part of a growing trends and during the first four months of the year, a 44 per cent fall in transactions has been noted. So far in 2013, 1,298 properties have been sold in Cyprus, compared to 2,313 during the same period last year.

This drop-off is down to a reduction in domestic sales and in April a fall of 51 per cent was noted in the domestic market. Despite estate agents selling properties at considerably knocked-down prices, the real estate sector is unable to get itself back on its feet. Cyprus is certainly in the doldrums lately and while May could see sales rise once again, the increase is likely to be slight.

However, the situation will come as no surprise to many, after the country accepted a bailout in March. Under the rescue programme, Cyprus' second largest bank, Laiki Bank, will be closed and deposits over the agreed sum will be placed in a bad bank. These deposits total around €4.2 billion and may be wiped out entirely. Smaller deposits will be transferred to the Bank of Cyprus, which will undergo huge restructuring. No bailout money will be used to recapitalise it.

Will Spanish property market recover as unemployment falls?

Thu, 16 May 2013 13:45:04 GMT

Despite fears over a Spanish collapse abating in the eurozone, the country is certainly not out of the doldrums yet. The level of unemployment in Spain is still leaving a question mark over its ability to recover from recession and the property market is continuing its descent. So is there light at the end of the tunnel and will the grip of unemployment relinquish its hold any time soon?

Recent figures leave us anything but optimistic on this point. During the first three months of the year, more than six million Spaniards were out of work. The jobless rate now stands at 27.2 per cent - the highest level since records began in the 1970s. As the fourth biggest economy in the eurozone, this is worrying not just for Spain but the EU at large.

Many are blaming the continued crisis on Madrid's severe spending cuts, which were made to help increase investor confidence in the country. However, Spain has been plunged into deep recession and unemployment has been rising for seven consecutive quarters.There will no doubt be considerable debate as to whether easing off budget austerity could help to turn fortunes around.

Speaking about the recent findings, strategist at Citi in Madrid Jose Luis Martinez said: "These figures are worse than expected and highlight the serious situation of the Spanish economy as well as the shocking decoupling between the real and the financial economy."

The collapse of the property market has done little to help the situation and since the boom ended millions in the construction sector have found themselves out of work. However, until unemployment levels improve, demand for Spanish real estate will remain relatively subdued. While foreign interest remains buoyant, it cannot reinvigorate the sector single handedly - domestic activity must return.

Nevertheless, there are indications that Spain will eventually see an end to recession. The country is performing well in the export market and the International Monetary Fund has said the country's financial restructuring is on track. Prime Minister Mariano Rajoy is confident that Spain will begin to recover in 2014 and has faith in his government's labour reforms, which are designed to help address unemployment.

Toxic asset shedding threatened by Spanish economy

Fri, 10 May 2013 14:49:49 GMT

The shedding of toxic Spanish property assets is being threatened by the country's flailing economy. Bankers and analysts are privately starting to fear the worst and there is speculation the bill to bail out banks will rise further in the future, the Global Post reported. Despite positive reports emerging from the country, the losses accrued in the real estate market during the recession mean help could still be needed to keep bad bank Sareb ticking over.

The bank was created to absorb the distressed assets of state-rescued banks. It took on €50.7 billion worth of foreclosed properties and troubled loans. This was matched by €50.7 billion in senior debt and backed by €4.8 billion in capital. More than half of this was put forward by healthy lenders in the country, but there is now concern this isn't enough to withstand losses, according to the news provider. However, finding money to top up capital will prove difficult in the private sector.

"The government is going to have to take over the entire vehicle sooner or later," a Spanish banking executive told the Global Post, on a condition of anonymity. This will spell bad news for the country, denting confidence in its already fragile markets. Last year Spain had to take €41 billion of a €100 billion European credit line to bail out banks, adding an equivalent of 3.5 per cent of gross domestic product to a deficit that is already higher than under EU rules.

However, Sareb looks like it is going to have to take even greater losses in the future if it wants to clear its backlog of toxic assets. Goldman Sachs has warned that real estate prices must decrease by a further ten per cent if Spain wants to turn its fortunes around. The Daily Telegraph reported that the global investment bank is calling for a fundamental restructuring of the country's lenders and believes banks are holding back progress. With a deficit reduction plan abandoned, new value models will be needed for the property sector.

Is Romanian property stabilising?

Tue, 7 May 2013 16:16:00 GMT

Figures suggest Romanian real estate prices could be stabilising, with the Eurobank Property Services' Residential Property Index noting fluctuations around a relatively constant average in Q1 2013. The Romanian Insider reported that average house prices increased slightly in the first three months of the year, after a small fall in Q4 2012. Values now stand at around € 45,000 (£37,867 approximately) across the country, while the Bucharest Ring and central Bucharest are enjoying higher values of €60,000 (£50,490 approximately) and €80,000 (£67,320 approximately) respectively.

However, this comes after four consecutive quarters of price drops, equating to a 1.2 per cent fall. While this is relatively small compared to the 33 per cent crash recorded since the 2008 peak, it's still not at the level many would hope. According to the newspaper, prices in central Bucharest and the Ring dropped during Q1 by 4.1 per cent and five per cent respectively quarter-on-quarter. Since the recession, values have fallen a shocking 51 per cent in the capital - an average of 13.3 per cent per annum.

Bucharest is certainly taking a hit and is even bucking national averages for old and new properties. In Bulgaria, new build values are rising faster than the national average, but in the capital, new property prices are falling rapidly than other real estate. This is bad news for investors in the city and presents a conundrum for the local property market.

Nevertheless, there is good news for Romania and the South and Moldova enjoyed significant price gains in the first three months of the year, increasing by 7.8 per cent and 3.9 per cent respectively, the Romanian Inside revealed. The cities of Craiova and Oradea had the highest levels of growth, with values up by over ten per cent in both places.

Stabilisation for the market was first reported by Eurobank Property Services in February. Their Business Review showed that residential real estate had only decreased by 0.8 per cent in 2012 year-on-year. Downtown Bucharest even reported a seven per cent annual average price rise between 2011 and 2012.

Bulgarian property sales on the rise

Wed, 1 May 2013 13:00:43 GMT

Property in Bulgaria has had a strong start to the year, with sales increasing over the first three months. Data from the Bulgarian National Statistics Agency, relayed by Postbank, showed transactions skyrocketed by 23 per cent in Q1, compared to the same period in 2012. Total units sold ended the quarter at 44,174, Standart reported. This is a significant leap from 35,821 units transacted during the same time last year.

Mortgage loans are the most common means through which properties are being obtained, accounting for 13 per cent of all sales. This equates to 5811 units. With Postbank registering an increase in the number of people asking for loans of 25 per cent, activity in the sector is certainly improving. The newspaper explained that 74.5 per cent of these were in Bulgarian lev rate, compared to the year previous when just half were. Postbank expects this to continue and reach a market share of 80 per cent.

This is a pleasing turn around from previous quarters, when the market has remained sluggish. The Global Property Guide reported in February that prices were continuing to slowly decline, causing stagnation - a trend not expected to change any time soon. Figures from the National Statistical Institute showed that in Q3 2012, the average price for existing flats dropped by 2.2 per cent to BGN 881.2 (£384.03 approximately) per square metre.

Real estate in Bulgaria now has a value 38 per cent lower than its Q3 2008 peak, when values stood at BGN 1,481 (£645.43 approximately) per square metre. While it is now cheaper to invest in property in the country, return on investment is unlikely to be quick and holiday lets are sure to be the best way to generate an income. Popular tourist spots like Sunny Beach are still attractive markets for buyers.

However, even the capital Sofia has witnessed significant price drops, with dwelling values falling by 0.6 per cent since 2011 and 41 per cent since peak, the Global Property Guide reported. In February, prices stood at approximately BGN 1,447 (£630.61).

Paris apartments still too expensive

Thu, 25 Apr 2013 13:43:56 GMT

High prices are denting interest levels for Parisian property, according to one property expert. Christine Perrissel, company director of Agence Etoile, told Bloomberg that at least one in four apartments in the city can't be sold. This is despite mortgage rates currently standing at record lows.

So why aren't more people opting for French real estate? After all, prices are high in London but demand remains constant. It seems the state of attrition reached in the Parisian property market is thanks to an unwillingness of sellers to lower values. "I have some inventory that’s too expensive and sellers don’t want to lower prices," Christine Perrissel told the news provider. "Buyers are just much more selective."

This isn't the first negative report of the French property market to emerge. At the beginning of April the Global Property Guide reported that the country is struggling to bring down its sky-high unemployment rate and budget deficit, which is having knock-on effects for the real estate sector. The National Institute for Statistical and Economic Studies recorded a 1.63 per cent fall in house prices in Metropolitan France for 2012 compared to 2011 levels. This is the third consecutive year of annual declines.

When adjusted for inflation, values dropped by 3.12 per cent, with a 1.27 per cent quarter-on-quarter rise in Q4. Sales volumes have also taken a hit, with data from La Chambre des Notaires de Paris reporting just 709,000 homes were sold across Paris last year. This is a fall of 12 per cent year-on-year.

The poor health of the market is partly due to the inactivity of first-time buyers. As in most of Europe, those looking to get a foot on the property ladder have remained constrained in France. Les Chambre des Notaires de Paris believes this is due to the end of the loan to zero ration and the percentage of transactions by purchasers under 30 years of age fell to 15.8 per cent of all sales in 2012.

Is the South African property market turning a corner?

Mon, 15 Apr 2013 13:45:22 GMT

It seems as though there is light at the end of the tunnel for South African property buyers, with the latest Absa house price index showing positive indicators in certain parts of the market. The report showed year-on-year growth in average home values of the middle housing segment reached an upper turning point in Q1 2013, while low interest rates are making real estate more affordable. This means the market is becoming more attractive for a wider range of investors.

The Absa house price index is based on applications for mortgage finance in respect to middle-segment small, medium-sized and large homes. It tracked 11.8 per cent year-on-year growth in the middle segment in March, after a 10.9 per cent rise in February. Real price growth stood at 4.8 per cent annually in February, after adjustment for the effect of consumer price inflation, which was recorded at 5.9 per cent. Average nominal value of homes in each of the three middle-segment categories stood at R752,600 (small), R1,079,500 (medium-sized) and R1,609,600 (large).

Economic conditions also helped to keep prime and variable mortgage interest rates stable at 8.5 per cent per annum. Rising fuel prices and a weaker rand exchange rate have been driving inflationary pressure for headline consumer prices. The South African Reserve Bank expects inflation to average 6.3 per cent year-on-year in Q3 2013, before slowing to more than five per cent in Q4 2014. The repo rate stood unchanged at five per cent per annum. This stands against the background of an expected real economic growth rate of 2.7 per cent in 2013 and an inflation average of six per cent.

Absa explained: "Nominal year-on-year house price growth appears to be peaking in some categories of the middle-segment of the market, influenced by market conditions and slowing month-on-month growth in the past few months. Nominal price growth for the full year is forecast to be in single digits, with real price trends to be driven by a combination of nominal price movements and consumer price inflation."

Macroeconomic environment continuing to harm Spanish confidence

Tue, 9 Apr 2013 13:16:19 GMT

The macroeconomic environment is continuing to harm confidence in the Spanish property market in both residential and commercial sectors. The IPD Spain Annual Property Index showed a 2.1 per cent drop in total returns for commercial property in 2012. Combined with continued reports of falling house prices and transactions, the picture isn't looking too bright.

After two years of positive returns in the commercial market, the latest IPD figures fly in the face of reports that Spain is beginning to stabilise.This was driven by an acceleration of negative capital growth of -7.4 per cent in 2012. This is significantly greater than the 2.6 per cent reduction in 2011 and the fifth consecutive year Spanish real estate capital values declined. While income return remained stable at 5.7 per cent, commercial property underperformed the domestic equity market and bonds. All three saw a year-on-year deterioration in capital growth, led by industrial, retail and offices.

Olivier Mege, deputy managing director at IPD France and Southern Europe, said: "The Spanish economy, still in recession, had a difficult year in 2012 with a GDP growth of -1.4 per cent, as well as rising unemployment, up to 26 per cent by the end of last year, which is the highest unemployment rate of the EU. The uncertainty of the macroeconomic environment, with Spain’s risk premium and the shadow of its rescue, also had a negative impact on real estate market confidence."

Property prices are continuing to fall in the residential market also, with unemployment and lack of economic stimulus affecting activity. However, foreign investors are still flocking to Spain, with data from the Ministry of Development showing that overseas buyers increased by 13.7 per cent in 2012. Property transactions on private homes amounted to €6,336 million - a rise of €5,573.3 million in 2011. El Mundo reported that Spain's second-hand housing market saw the biggest rise, with € 5,265 million recorded in 2012.

Is the French housing market in trouble again?

Mon, 8 Apr 2013 13:13:25 GMT

There may be trouble ahead for French property, with reports suggesting key indicators fell throughout 2012. The Global Property Guide reported that the country is struggling to bring down its sky-high unemployment rate and budget deficit. This is harming the health of the real estate market and the National Institute for Statistical and Economic Studies has noted a 1.63 per cent fall in house prices in Metropolitan France compared to 2011 levels - the third consecutive year of annual declines. According to the news portal, when adjusted for inflation values dropped by 3.12 per cent, with a 1.27 per cent quarter-on-quarter rise in Q4.

However, it isn't just prices that are feeling the economic backlash. Data from La Chambre des Notaires de Paris has shown that sales volumes also took a tumble in 2012. Throughout France, 709,000 homes were sold last year, a fall of 12 per cent year-on-year. The rental market is also suffering, as investors lose their confidence in light of new regulations. The Duflot Act and the new device rental investment rules haven't yet made their impact and there is fear rent regulations will tighten further. What's more, the chance of short-term gain has all but vanished.

As in most of Europe's property markets, first time buyers have remained constrained in France. According to La Chambre des Notaires de Paris, this is due to the end of the loan to zero ratio. The percentage of transactions by purchasers under 30 years decreased in 2012, standing at 15.8 per cent of all sales. However, interest by foreign buyers has remained stable, showing that despite economic conditions, overseas markets are proving resilient across Europe.

So what can be done to change the fortune of French property? "Vendors must adjust their prices to the solvency of buyers," La Chambre des Notaires de Paris said in a statement. Continuing to price real estate too high will limit activity and cause the sector to weaken further.

Confidence is returning to Spain, expert claims

Mon, 8 Apr 2013 13:13:25 GMT

Confidence in the Spanish economy is returning, according to one business expert. Ignacio Sanchez Galan, president of power giant Iberdrola, claims that reforms undertaken in the country in recent months have given investors assurance that Spain is once again open for businesses.

The overhaul of the financial sector and labour markets has been well publicised recently and there is confidence that growth will return in 2014. A report from the Spanish Business Council on Competitiveness has also claimed that good news is on the horizon for the country. Data from some of Spain's leading companies suggests that by the end of the year the economy will be on "positive levels".

"With the change in the productive structure and the emphasis that is being put on exports, we can began to think that the upcoming year can be one of growth," Mr Galan said. "Spain is today capable of accessing the markets in much better conditions than a year ago."

These words will be welcomed by the Spanish property market, which needs the economy to strengthen and domestic buyers to return in order to recover. While foreign buyers are helping to sustain demand for prime property in top destinations, other parts of the country aren't faring so well. What's more, financial institutions are struggling to rid their books of distressed real estate assets, despite significantly reducing their prices.

With an end to the crisis in sight, there is certainly hope for the sector. However, Spain still needs to prepare for tough times ahead. Prime minister Mariano Rajoy claimed that while there will be a return to growth in 2014, austerity measures will continue in the near term and 2013 will be another hard year. However, this is vital for the future of the country. "In 2014, if we are able to maintain the same level of effort, the Spanish economy will grow markedly and begin to create jobs," Mr Rajoy said. For the 26 per cent of the country out of work, this will be good news.

Is 2014 the year of recovery for Spain?

Fri, 5 Apr 2013 13:17:21 GMT

There may be light at the end of the tunnel for Spain, despite continued economic contraction and a second year of recession. Prime Minister Mariano Rajoy claimed on Wednesday (March 3rd) that there will be a return to growth in 2014, so long as the government continues with its austerity reforms. "In 2014, if we are able to maintain the same level of effort, the Spanish economy will grow markedly and begin to create jobs," he said during a meeting of the Popular Party.

This is good news for Spanish property and the economy at large, which have been lacking strong domestic activity and suffering from low investor confidence amid financial uncertainty. However, Mr Rajoy stressed that 2013 would be another difficult year for the country, specifically during Q1 and Q2. "Tangible results" will not be seen until the back end of the year, he said, but moving away from austerity policies "would be fooling the Spanish people".

Unemployment has been cited as one of the major barriers for growth in Spain and currently stands at a record 26 per cent. This equates to nearly six million Spaniards out of work and Phillip Inman, economics correspondent for the Guardian and Observer, and author of Managing Your Debt, a Which? essential guide, wrote in the Guardian that current unemployment levels are now reminiscent of the days of Franco.

For those out of work, Mr Rajoy's claim that 2014 will see more jobs will be welcomed. However, it can't be ignored that the economy contracted by 1.4 per cent in 2012, the second worst annual slump since 1970. Last week the Bank of Spain predicted this figure will be topped in 2013, with 1.5 per cent shrinkage. While there will be modest 0.6 per cent growth in 2014, this isn't the headline-grabbing good news many will be hoping for.

It seems Spain's recovery will be slow and steady, with the country still vulnerable to external shocks. However, for those considering investing in Spanish real estate, comfort can be taken in the thriving market in key resorts, such as the Costa Brava and Costa del Sol.

Australian capital cities post property rises for Q1

Thu, 4 Apr 2013 12:34:57 GMT

The first quarter of 2013 has been a strong one for Australian property, with the country's capital cities each posting price increases. Figures from RP Data showed that dwelling values across the combined capitals rose by 2.8 per cent between January and March. This takes cumulative capital to 4.7 per cent after the market 'bottomed out' in May 2012.

March itself enjoyed a strong performance, with dwelling values rising over the month by 1.3 per cent across the combined capital city index. The only city not to report an increase in property prices was Adelaide, but the market remains steady. Perth was the site of the most growth throughout march, with dwelling values inflating by 3.4 per cent. Hobart and Darwin also posted considerable rises of 2.5 per cent and 2.4 per cent respectively. However, over the year, Hobart is the only capital city that hasn't experienced an overall increase in values, recording -1.2 per cent growth.

RP Data research director Tim Lawless said: "Since the capital city housing market bottomed out at the end of May last year we have seen dwelling values rise by 4.7 per cent after falling by 7.4 per cent from their market peak back in late 2010. The most significant recoveries have been recorded across Darwin, where values have risen 13.9 per cent since bottoming out in January last year, and Perth where values are up 9.4 per cent since the market trough in November 2011."

There is also good news for the rental market, with both Darwin and Perth recording growth higher than ten per cent year on year. This is significantly higher than other cities across the country and bodes well for those considering investing in these areas. For Darwin, total year gross returns stand at 13.9 per cent, based on gross yield and capital gains. Perth has a total growth return of 10.6 per cent, while the combined average for the capital cities is just 6.9 per cent.

Will Cypriot bailout harm the property market?

Tue, 26 Mar 2013 13:24:22 GMT

In the early hours of yesterday (March 25th) morning Cyprus agreed a bailout deal to prevent it becoming the first country to be forced out of the single currency, but what will this mean for the property market?

After refusing the first deal that imposed a 7.75 per cent tax on all depositors, the country finally settled on a programme that spares deposits below €100,000 (£85,500). The country's second-largest bank, Laiki Bank, will be closed and its deposits over the agreed sum will be placed in a bad bank, similar to that of Spain. These deposits total around €4.2 billion and may be wiped out entirely.

Smaller deposits at Laiki will be transferred to the Bank of Cyprus and all lenders to the closed bank will see their deposits wiped. However, the central bank will not go untouched and will be subject to huge restructuring, but no bailout money will be used to recapitalise it. Instead, shareholders and bondholders will face losses, as will depositors with over €100,000 at the bank.

This spells bad news for Cypriot property, bringing further instability to the sector at a time when prices are already falling. While there is no doubt investors can now obtain real estate at pleasingly low prices, many may not want to take the risk associated with entering a financially volatile country.

Problems associated with implementing financial reforms in Cyprus have already been identified. The Guardian reported that getting the Bank of Cyprus up to healthy EU-mandated capital levels will be difficult because it will inherit the €9 billion debt Laiki had with the European Central Bank. Strict controls on money transfers will also be needed throughout the country's financial system, which will have a considerable impact on the Cypriot economy.

Experts predict that the economy may contract by ten per cent or more over the coming years, the Wall Street Journal reported. This is made worse by the already vulnerable position of the country.Consequently, domestic and international property demand may be considerably constrained in the near-term.

Is it time to revise Spanish forecasts?

Thu, 21 Mar 2013 11:12:14 GMT

Economic and property forecasters in Spain may want to revise their predictions this month, after prime minister Mariano Rajoy indicated the government will be doing the same. Reuters reported that the country is to undergo a revision of official forecasts to ensure they more accurately reflect the Spain's economic position.

"International organisations have changed their forecasts on a number of occasions and there are factors that, no doubt, will oblige us to do that ... I believe we will change our forecasts," Mr Rajoy stated in Parliament. According to Reuters, projections are likely to be revised in April to a 0.5 per cent contraction in gross domestic product (GDP) for 2013. This will coincide with the passing of the forecasts to Brussels. However, most analysts believe that GDP will shrink by 1.5 per cent this year.

The recent Cypriot bailout will do little to improve conditions in Spain and there is a already fear that a contagion will ensue in the eurozone. As details of the crisis package emerged earlier this week, Spanish yields increased by 15 bps to 5.08 per cent. Lyn Graham-Taylor, rate strategist at Rabobank, told Reuters: "What they've done is a fundamental change in terms of how deposits are viewed in terms of safety. It's a clear danger of contagion spreading to Spain and Italy, etc. If you're a Spanish depositor would you keep your savings in Spain or move them to Germany?"

So will falling GDP affect Spanish property forecasts? Unfortunately, the answer is likely to be a resounding yes and financial instability is likely to bring with it high unemployment and low levels of real estate activity in domestic markets. However, in popular resorts the country's economic position is likely to do very little damage to housing demand. Foreign buyers continue to be attracted to Spain for second homes and holiday lets, taking advantage of falling property prices. Nonetheless, it is still a cash market and buyers must ensure they are able to secure finance.

Is South African property on the road to recovery

Wed, 20 Mar 2013 17:24:01 GMT

All signs appear to be pointing to a South African property market recovery, following a sluggish four years. The Global Property Guide reported that the sector is now gaining momentum and during 2012, the house price index for medium-sized homes increased by a pleasing 9.53 per cent (3.57 per cent) in real terms, based on figures from ABSA. This is the best year-on-year rise since February 2008.

What's more, house prices increased by 2.93 per cent (1.63 per cent in real terms) during the latest quarter and in January 2013 the average price of small homes (80 to 140 square metres) was ZAR 789,400 (£56,493 approximately), according to the news portal. The average price of medium-sized homes (141 to 220 square metres) also rose to ZAR 1,077,700 (£77,126 approximately), while the average value of large homes (221 to 400 square metres) ended January at ZAR 592,800 (£42,424 approximately).

ABSA claims this growth is being driven by low interest rates and affordable mortgage finance. However, South Africa's slowing economy will impact upon the property market. ABSA predicts that house prices will increase nominally in 2013 but will stay in single digits, the Global Property Guide revealed. Increases in inflation will also put house prices under pressure.

This means that the lofty heights experienced during the housing boom between 2000 and 2006 will not take place again anytime soon. Nonetheless, the market has become a more open place for foreign investors. Overseas buyers can now own immovable property in South Africa without restriction, but foreign funds remitted to the country must be declared and documented to ensure repatriation. The news portal revealed that property bought by foreigners must also be endorsed as non-resident for repatriation.

When buying real estate in South Africa is vital to note that upon selling property Capital Gains Tax must be paid on homes. Nonetheless, conditions in the country are becoming more favourable for investment. Carollize Laing, First National Bank (FNB) Commercial Property Finance head of residential and affordable housing, explained that demand is high in the country. Competition is particularly high in metropolitan areas, but this is pricing some domestic buyers out of the market.

What does Cypriot bailout mean for Spain?

Tue, 19 Mar 2013 14:28:06 GMT

As the details of the Cypriot bailout begin to emerge, many will be wondering what it will mean for other European nations struggling under the weight of the financial crisis. Spain is just one country in the firing line and there is fear that the bailout will spark a contagion in the eurozone - and a return to even darker days.

Thus far, the extent to which the ramifications of the Cypriot crisis will be felt is unclear. Italian and Spanish yields increased today, while German yields hit 2013 lows. There is undoubtedly uncertainty in the continent and Reuters reported that fear is mounting that the same measures included in the bailout could be taken elsewhere if Spain and Italy require funding aid.

The condition of the rescue package causing the most concern is the demand for Cyprus to use saver's cash. Without satisfying this measure, the country will not receive €10 billion of funding. This is a departure from previous funding package criteria, which had tried to protect savers.

Spanish yields for protecting debt increased following the announcement of the bailout, rising 15 bps higher to 5.08 per cent. Lyn Graham-Taylor, rate strategist at Rabobank, told Reuters: "What they've done is a fundamental change in terms of how deposits are viewed in terms of safety. It's a clear danger of contagion spreading to Spain and Italy, etc. If you're a Spanish depositor would you keep your savings in Spain or move them to Germany?"

Should investors flee Spain, the country could find itself in hot water, as banks struggle to keep their heads above water. This also doesn't bode well for the sale of distressed Spanish property, with most buyers preferring prime developments in popular coastal areas. Even priced at a significant loss, banks are struggling to shift their toxic assets.

Nonetheless, while prices are continuing to tumble, property is still a strong investment in Spain. Tourism levels remain high and the buy-to-let or holiday rental market could prove lucrative for the right property.

Spanish public sector debt rising

Mon, 18 Mar 2013 13:22:37 GMT

While conditions in Spain are favouring foreign buyers, the domestic market isn't looking in good health. News that the country's public sector debt surged by 20 per cent last year is yet another worrying sign. The central bank revealed that borrowing rose to € 884.4 billion (£763.2 billion approximately) at the end of December from €736.5 billion (£635.5 billion) in 2011. This represents an 84.1 per cent of gross domestic product (GDP) and is up from 69.3 per cent in 2011 and 77.3 per cent in the penultimate quarter.

While the European Commission forecast Spanish debt to stand at 88.4 per cent of GDP, the figures are still disheartening. Spanish debt is now at the highest level in eurozone history and while the restructuring of the country's financial system is proving promising, change will take a while to filter through.

The central government has been found to account for most of Spain's debt, with the 17 semi-autonomous regions generating a collective €185 billion (£159.6 billion approximately) debt.

However, when analysing the implications of these figures, the central bank has made clear that several factors need to be taken into account. "The debt figures now being disseminated include operations relating to the Regional Government Liquidity Fund (FLA by its Spanish acronym), which came on stream in the closing months of last year," it wrote. What's more, general government debt of non-recourse factoring operations are now included in calculations, after Eurostat's decision to change the methodological treatment of trade credit. This means that as of July 31st 2012, when suppliers of goods and services to general government transfer their trade credit to financial institutions, these liabilities are recorded as loans granted to general government.

Nonetheless, it is unlikely that foreign buyers will be deterred by Spain's current financial position. The General Council of Notaries revealed that a massive 28.4 per cent more foreign buyers and non-residents purchased Spanish property in 2012. Throughout the year, 38,312 transactions took place including foreign buyers - a level that is almost on par with pre-recession 2007 levels.

Has Spanish financial restructuring hit a roadblock?

Wed, 13 Mar 2013 14:16:30 GMT

The restructuring of the Spanish financial system may have hit a roadblock, with economy minister Luis de Guindos declaring that the country's three fully nationalised banks will not be merged. Reuters reported that despite a failed auction attempt, the option of a merger will not be explored. However, with Spain under pressure to privatise the institutions before the EU-imposed deadline of 2017, the government needs to come up with a new plan and fast.

Last week, sources had told the news provider that officials had been investigating a full or partial merger of Bankia and Catalunya Banc, after sales collapsed. The third lender, NCG Banco is currently fully owned by the restructuring fund FROB. "We have three banks 100 percent-owned by the FROB, and logically there will be a coordination of plans between the three," Mr de Guindos said."They will absolutely not be merged."

Placing Catalunya Banc and Bankia under one holding company is one way to avoid a complete merger, which would require input from Brussels. However, there may still be a reluctance on the part of some to wave goodbye to hopes of autonomy for the three banks.

So what does this mean for Spanish property? Ultimately, with the country's banks still under government control, lending is likely to remain constrained and uncompetitive. What's more, there could be implications for the ability of banks to handle toxic assets.

However, any concern is arguably premature, as the International Monetary Fund (IMF) has declared that Spain's financial reforms are on track. Officials particularly praised the country's conduct in absorbing troubled financial institutions into Sareb and managing the transfer of assets.

Nonetheless, the IMF has highlighted that "vigilant oversight" is needed to ensure any risks to the economy and the financial sector are controlled. Spain remains in a fragile position, with recession in other parts of Europe filtering through to the country. The economy is also expected to shrink in 2013 for the second year in a row, while unemployment looks set to rise.

Languedoc-Roussillon property bucking downward trend

Fri, 8 Mar 2013 15:24:19 GMT

Price growth is slowing for French property, but the Languedoc-Roussillon region is managing to buck this downward trend. Data from the National Federation of Property Industry Agents in France revealed that growth across the channel stood at 0.8 per cent in 2012 and will fall by a further two per cent this year. However, in the Languedoc-Roussillon in the south-west of the country, there have been positive price increases.

The region recorded an overall property price rise of 1.8 per cent in 2012, with the Languedoc-Roussillon region managing to increase its real estate values by 0.5 per cent. Danny Silver, founder and managing partner of The Villages Group, commented: "Price falls for 2013 have indeed been widely predicted by agencies such as Standard & Poor's and Orpi but it is naive to think that all regions of France will the affected to the same extent.

"Q4 2012 actually saw price growth in Ille-de-France, Provence-Alpes-Côte d'Azur, Champagne-Ardenne, Upper Normandy and Languedoc-Roussillon, where our new Villages project is located and I see no reason why this growth will not continue in 2013."

France as a country continues to be popular with overseas investors and its draw doesn't seem to be relinquishing despite the current climate. Mr Silver stressed that compared to other destinations, France is relatively stable and hasn't experienced the property crashes that have occurred in Spain, Portugal and Cyprus. Consequently, a slowdown of 0.8 per cent is not an issue of great concern as long as buyers "choose the right property, in the right location, for the right reasons".

Rich, highly mobile individuals are also continuing to flock to the country, according to the international outlook report from Beauchamp Estates. Property Community reported that St Tropez, Cannes, Cap d'Antibes and Cap Ferret on the French Riviera are proving to be particularly popular and there are currently 71,000 holiday homes held by foreign owners. Over a period of six years, the region managed to increase its second home ownership by 15 per cent, with Russian speakers dominating the sector.

Languedoc-Roussillon property bucking downward trend

Fri, 8 Mar 2013 15:24:19 GMT

Australian home credit growth 'anaemic'

Wed, 6 Mar 2013 14:13:20 GMT

Credit growth for Australian property has been 'anaemic' going into 2013, according to the Global Property Guide. Figures from the Reserve Bank of Australia have shown that loans acquired to buy homes rose by 0.4 per cent in January, up from 0.3 per cent growth recorded in December. However, compared to the same period in 2012, when loans granted grew by 4.4 per cent, this figure is arguably disappointing.

Slowing growth in the country has been attributed to consumers in Australia holding back spending and borrowing - a trend that has been in place for some time. Consequently, the central bank has decided to freeze rate cuts this month, while benchmark rates will remain at three per cent to keep the balance between the country's domestic growth and the static rate of the Australian dollar, analysts at the Global Property Guide claim.

Paul Bloxham, former RBA board member and chief economist of HSBC Holdings Plc in Sydney, claims that it is "dovish" to keep the dollar from surging too high, while continuing to pursue a rebalancing of GDP growth.

So will freezing rates help to encourage more people to enter the Australian property market? With even the appetite of first-time borrowers remaining subdued, the country may be in for a long wait to recover their pace of growth. RP Data revealed that in 2012, first time buyer numbers are still 17 per cent below the average, despite low interest rates between November and December, the Global Property Guide reported.

Despite this, the Australian property market is expected to remain stable throughout 2013. The latest Fitch Rating report claimed that the country will be one of the only countries that enjoys growth and its mortgage default rate will be among the lowest in the world. Nevertheless, there is little uncertainty about the fact the days of double digit growth have come to an end. There has even been contraction in certain parts of the country, including the Gold Coast. However, for investors, this is likely to mean a new influx of affordable property.

Spain's bad bank to receive more soured property assets

Fri, 1 Mar 2013 13:56:20 GMT

Spain's 'bad bank' Sareb is poised to receive €14 billion (approximately just over £12 billion) of soured property assets from a collection of mid-sized banks in the country. The government-backed organisation is set to use the investment to continue to clean up Spain's banking system following the nation's property crash five years ago.

The country's government launched Sareb towards the end of 2012 as part of a €40 billion (£34.5 billion) strategy to rescue the nation's ailing lenders. Since its introduction, the bad bank has taken on tens of thousands of troubled loans relating to developers, plots of land and buildings. These transactions have been found to be at various stages of development.

In a bid to provide a further boost to the Spanish property market, the organisation is now set to receive €2.2 billion (£1.89 billion) worth of assets from Caja 3, which is set to be taken over by Ibercaja, on top of €3.1 billion (£2.67 billion) of assets from savings bank group CEISS.

Meanwhile, BMN will transfer loans and properties totalling €5.8 billion (£5 billion) to Sareb, as the bank prepares to be majority-owned by the state, and finally Liberbank is prepared to transfer €2.9 billion (£2.5 billion) of bad real estate assets to Spain's bad bank.

All of the transactions are set to be complete by the end of the day (February 28th) and should result in Sareb's assets increase to between €50 and €55 billion (a range of approximately £43.1 to £47.5 billion).

The bad bank has proven useful in Spain since its integration late last year, with just over half of the organisation's capital now in the hands of private investors. These are mainly made up of healthier banks in the country that have not transferred their assets to Sareb, thus easing the burden on the nation's public finances.

"Doubtful" property loans reduced by Sareb

Mon, 25 Feb 2013 13:59:54 GMT

Spanish bad bank Sareb has reduced its number of "doubtful" property loans on its balance sheet to just 10.4 per cent. Spain's central bank revealed that the bank was able to cut its balance-sheet liabilities because 'group one' institutions - BFA-Bankia, Catalunya Banc, Nova Caixa Galicia Bank-Banco Gallego and Banco de Valencia - transferred €36 billion (£31.1 billion) in assets to Sareb. This was primarily in the form of foreclosed properties and non-performing loans.

"As was to be expected, the transfer of assets to Sareb, including doubtful loans relating to the real estate sector, has led to a significant decline in the total outstanding balance of doubtful loans on credit institutions' aggregate balance sheet in December," the central bank wrote in its report.

However, Sareb hasn't yet indicated how it will price distressed loans or bricks-and-mortar assets. Pricing has remained an issue because a large volume of assets are development projects or land with "questionable" long-term value. There is also fears that Spanish property will not be priced at a sum that will be attractive to investors, while other banks in the country worry they will not be able to shift their assets once Sareb begins to release assets for sale.

Santander is just one institution taking action to pre-empt moves from the bad bank and has stated it will aggressively rid itself of distressed property this year. Santander chief executive Alfredo Saenz told Reuters: "If we can get in there before the Sareb starts achieving cruising speed, so much the better." However, Santander is under no illusions about the health of the market and is prepared to rid itself of toxic property at a great loss. In fact, the bank has set aside €1 billion (£86.4 million) to cover its deficit.

For banks in the country that did not need to transfer assets to Sareb, losses are unavoidable. Distressed property is being sold at great reductions and if institutions turn to private equity firms or hedge funds they stand to lose even more money, with many typically demanding discounts of 60-80 per cent.

Prices stabilising in Romanian residential sector

Fri, 22 Feb 2013 13:54:58 GMT

Romanian property prices are beginning to stabilise, according to the Residential Property Index from Eurobank Property Services. The Business Review reported that residential real estate values only decreased by 0.8 per cent in 2012 year-on-year - a significant improvement on previous price falls. Some parts of the country even experienced increases, with downtown Bucharest reporting a seven per cent annual average price rise between 2011 and 2012. The area finished the year with a 5.2 per cent price hike in the final quarter.

Bucharest as a whole enjoyed a strong performance last year and residential properties in the rest of the city enjoyed a 0.8 per cent annual rise and a 4.3 per cent increase in Q4, the news portal recounted. Eurobank Property Services claim this is the beginning of a positive upwards trend, which bodes well for the sector and country as a whole.

“At the end of another year of coverage the annual EPS residential price index for Romania clearly delivers a message of price stabilisation, with a national price reduction of only 0.8 per cent for 2012, following reductions of about five per cent for 2010 and 2011," the report stated. "The quarterly index suggests that national market prices fell by 2.2 per cent in the last quarter of 2012, but this may be well attributed to the seasonal fluctuations around a stable trend."

Eurobank Property Services added that while prices continue to fall at the divisional level, this is occurring at a much slower pace. Combined with a trending pattern for growth in urban centres, things are certainly picking up for the Romanian property market. The Erste Group Bank Equity Strategy Q1 2013 report claims that the economy will also be picking up, with the country's fundamentals performing well in 2012. This is in part thanks to the government's consolidation of public finances, ensuring the country is better placed to finance its debts. By the end of 2013, it is expected that the budget deficit will stand at 2.7 per cent, while GDP will grow by 1.1 per cent.

Spanish property still weighing heavily on banks

Fri, 22 Feb 2013 10:26:49 GMT

Distressed Spanish property is still proving to be a thorn in the side of banks, with many expected to make bigger losses than previously hoped. Reuters reported that with Sareb now releasing toxic assets to the market, other banks are struggling to compete. Consequently, they are left with large volumes of real estate repossessed from borrows.

With financial institutions forced to make extreme cuts on distressed property - around 50-60 per cent - the situation is understandably weighing heavily on the country. What's more, despite considerable discounts, demand for property is weak, with most foreign buyers looking for prime units.

Losses are proving to be unavoidable too, according to the newspaper. Should banks turn to private equity firms and hedge funds to clear their books of toxic assets, they will typically have to discount them by 60-80 per cent. Fernando Acuna of Taurus Iberica told Reuters: "The sale of secured assets to investors would likely be done at prices below those of the Royal Decrees (the government-enforced clean-up), with big discounts. The discounts from the decrees were more in line with the prices seen in the normal consumer market."

It isn't just banks that are feeling the heat either, with real estate company Reyal Urbis filing for insolvency on Tuesday (February 19th). This is the second biggest corporate crash Spain has endured and reflects the impatience of banks with debt-strapped companies that are unable to recover from the property crash.

Reyal Urbis collapsed after they were unable to renegotiate €3.6 billion (£3.1 billion) worth of debt and despite having a property portfolio valued at €4.2 billion (£3.6 billion approximately), their asset values are lower than the money owed. The decision now lies with the courts whether or not to liquidate the firm, which may take years.

For banks, staying afloat is now a matter of being able to pick up the pace, selling off the majority of assets before Sareb gains momentum. Santander is just one institution taking this approach and claims it will aggressively rid itself of distressed property assets this year. The bank has set aside €1 billion in its budget to cover any losses. Santander chief executive Alfredo Saenz told Reuters: "If we can get in there before the Sareb starts achieving cruising speed, so much the better."

Spanish labour reform 'won't breathe life' in property sector

Tue, 19 Feb 2013 13:39:22 GMT

Spanish property will not be saved by the country's labour reforms, according to one expert. Writing in The Guardian, Bob Hancké, reader in European Political Economy at the London School of Economics, claimed that despite alternative reports, figures show the recovery is far from close. Unemployment has been cited as the main reason behind the inability of the Spanish real estate sector to reverse the downward house price spiral. Despite prime minister Mariano Rajoy claiming his labour reforms are working, change isn't happening fast.

This can be seen in Spain's current unemployment rate, Mr Hancké claims, which stands at 26 per cent and looks unlikely to improve in the immediate future. The economic position of the country isn't improving significantly either. "The current account deficit is falling, less as a result of increased exports and more because imports fell dramatically as domestic demand collapsed in the wake of the housing and financial crisis," Mr Hancké wrote.

The academic added that it is "naive" to believe market reforms will lead to falling unemployment and economic growth. This is because economic growth must outpace productivity growth for this to occur and this is currently not happening in Spain.

So is it all doom and gloom for the property market? No, not entirely. Foreign buyers are still attracted to the country and there are areas where supply cannot meet demand, which is certainly something to marvel at in an overly saturated market. Spanish Hot Properties claim this is particularly clear in the luxury housing sector and there isn't currently enough stock to go around.

Nick Stuart, director of estate agent Spanish Hot Properties, explained that investors are flocking to popular areas like Marbella and want to access the best real estate on the market. However, the number of top quality modern villas or frontline beach apartments is too low and buyers are no longer attracted to the Andaluccian-style finca.

Will Cypriot properties devalue by 65%?

Thu, 14 Feb 2013 16:15:05 GMT

Cypriot property could be in for a tough time ahead, the Global Property Guide reported. Sources quoted by the Cyprus Broadcasting Service claim that the PIMCO Strategic Global Government Fund, Inc is to put in place a “worst case scenario” for the sector, downgrading property values by up the 65 per cent, Cyprus Property News revealed.

This is the result of continued financial and real estate difficulties in the country and will demand that the banking system obtains €10.1 billion (£8.7 billion approximately) to raise its basic capital to the level required by the European Banking Authority. However, this will take Cyprus’ total sovereign debt to unmanageable levels and make the European bailout much more difficult.

According to the newspaper, the Cyprus Central Bank met with PIMCO officials last week but the body does not believe that its baseline recapitalisation amount of €6.9 billion (£5.9 billion approximately) would be accepted by investors. The Global Property Guide believes this puts the country in a difficult position. “This worsens Cyprus’s tarnished reputation in its issuance of title deeds along with its structural weaknesses in its mortgage lending that started to erode the banking system in 2008,” they wrote.

Unfortunately, this is just the latest blow for Cyprus and at the beginning of February, figures from the Land Registry showed that transaction volumes are falling in the property sector. While low real estate prices in the country are enabling a greater number of foreign investors to buy a home in Cyprus, sales are actually decreasing. 2013 is expected to be an all-time low for property sales, which were down 53 per cent in January from the same time in 2012, Cyprus Property News reported.

While these figures were arguably slightly screwed, due to a rush to deposit contract sales in 2012 to benefit from a reduction in Property Transfer Fees, the Cypriot property market can be forgiven for being wary. Although January was predicted to bring lower transaction volumes than previous years, it was not expected that they would be the lowest monthly level on record and occur across all areas.

Future bright for property in northern Spain

Thu, 14 Feb 2013 09:17:15 GMT

The future is looking bright for Spanish property in the northern part of the country, according to new analysis of the market by Barcelona-based luxury realtor Lucas Fox International Properties. The Global Property Guide reported that demand and trading will increase this year, with half-yearly property reports on Barcelona, Costa Brava, Mallorca and Ibiza showing strong sales and rental statistics, as well as positive improvements on other key indicators impacting on demand, such as tourism.

Alex Vaughan, director of Lucas Fox, told the news portal: "Luxury property sales in the best locations of Barcelona, Ibiza, Mallorca, and along the Costa Brava coastline were much better than expected in 2012. In the second half of 2012, prices began levelling off and international buyers were quick to pick up the best-value properties: whether they were luxury lifestyle villas or bank-owned stocks that will require renovations in order to take advantage of their prime location.”

Ibiza is just one location enjoying a market surge of late, with foreign investors reacting to changing price signals. This helped to drive up property prices in the final quarter of last year. The average cost of real estate in Ibiza's capital of Eivissa now stands at approximately €2,955 (£2,533) per square metre. This is a massive €1,000 (£857.42) higher than the national average and is just one reason why overseas buyers are continuing to look to Spain for real estate.

However, it isn't just Ibiza where conditions are favourable for investors. Costa Brava is proving to be particularly popular with the French, Mr Vaughan told the Global Property Guide. He explained that the tax system and high-speed rail link are increasing Northern European demand for holiday homes along the Spanish coast. Consequently, properties in the Costa Brava can enjoy a price per square metre ranging from €1,295 (£1,110) in Cadaques to €2,721 (£2,333) in Platja d'Aro. For those looking to obtain bargain property, investing in a region that offers mid-range prices may be the best option.

Demographic changes influencing Australian property market

Wed, 13 Feb 2013 13:15:28 GMT

Demographic changes are affecting the Australian property market and investors may find certain segments more competitive now than in previous years. In what became a roundup of 2013 trends, industry experts told an Australian Property Institute forum that changes in population, family size, age and wealth are shaping real estate demand, the Telegraph (Australia) reported.

New housing products are also set to make a big impact, but there are mixed opinions over whether smaller lots, compact houses and fancy facades will translate into strong sales. REIWA president David Airey explained to the Residential Outlook 2013 forum, that buyer preferences are difficult to predict and investors are often driven by factors other than the property itself, the newspaper relayed.

"Very successful estates have the right mix of things: shopping centres, transport nearby, plenty of public open space, schools and the ability to move around freely,’’ Mr Airey said. "People will not change their need for transport; it will become a growing need, and it needs to be rail or light rail or buses in a dedicated route. We need schooling and good retail options so people can go shopping in their own areas. That’s the mix of ingredients that works."

This indicates that what will attract overseas investors may not have quite the same appeal in the domestic market. What's more, as new communities spring up and populations increase, property prices in key areas will be affected, as new 'hot spots' emerge.

Nonetheless, the future looks relatively bright for the Australian property market, with the latest Fitch Rating report indicating that stability will be the name of the game in 2013. Experts predict that house prices will remain flat throughout the year, but mortgage defaults will be among the lowest in the developed world. New homes are also proving popular, with sales increasing for a second consecutive month, according to the latest Housing Industry Association report. Contractions will occur in some areas, however, such as the Gold Coast - a spot traditionally popular with overseas buyers.

Will fortunes improve for the Spanish property market?

Tue, 12 Feb 2013 09:20:31 GMT

It is beginning to feel as though there is no end in sight to the global financial crisis and in those countries most affected, recovery seems a long way off. For Spain, the property market crash in 2008 contributed heavily to its downfall and real estate prices are continuing to plummet, despite considerable activity from overseas buyers. But what can be done to turn the tide?

For prime minister Mariano Rajoy, tackling unemployment is the answer. In an interview with the Financial Times, he explained that the only way to stimulate the economy again is to get Spaniards back into the workplace. This will help to reinvigorate the domestic property market and prevent widespread loan defaults. Labour reforms ushered in by the government are already helping to put employment levels back on the straight and narrow, according to Mr Rajoy. The changes make it easier for businesses to depart from region-wide collective wage agreements, make flexible deals at factory level and sack workers on fixed contracts.

While Spain is clearly not out of the doldrums just yet, there are signs that Mr Rajoy's policies are working. Preliminary data from the National Statistical Institute has shown several economic indicators are slowly improving. The seasonally adjusted Industrial Production Index showed a 2.4 per cent month-on-month increase in December 2012 and a working day adjusted rise of 4.1 per cent on December 2011 levels.

The mining and quarrying industry enjoyed a particularly strong end to the year, increasing production by 21.9 per cent, while electricity, gas, steam and air conditioning supply experienced 9.6 per cent growth. However, manufacturing production fell by a further 0.2 per cent, with the majority of losses noted in the manufacture of basic metals (15.6 per cent), rubber and plastic (15 per cent) and beverages (12 per cent).

Although it is possibly too early to celebrate, increases in production and slowing house price declines are cause to look to the future. For the Spanish property market, there is hope that domestic activity will return over the coming years, while foreign buyers continue to keep the sector ticking over, taking advantage of low prices while they last.

Bulgarian property market sluggish

Fri, 8 Feb 2013 12:20:36 GMT

It seems the word to describe Bulgarian property at the moment is sluggish, with statistics showing that prices are continuing to slowly decline. The Global Property Guide reported that with the economy improving only slightly and the housing market remaining fairly stagnant, any change in the sector isn't likely to occur any time soon.

Figures from the National Statistical Institute (NSI) revealed that in Q3 2012, the average price of existing flats fell by 2.2 per cent to BGN 881.2 (£384.03) per square metre. While this decrease is smaller than the 6.1 per cent decline noted in 2011 and the 4.3 per cent fall during the year to Q1 2012, it isn't the performance many in the industry will have been hoping for.

So what does this all mean for investors? Bulgarian real estate prices are now 38 per cent lower than their Q3 2008 peak, when they stood at BGN 1,481 (£645,43 approximately) per square metre. Consequently, potential buyers are able to obtain property at a much cheaper price, but in a sluggish market, any return on investment will not be swift.

What's more, with prices falling across the country, knowing where to invest can also pose significant problems. Even the capital Sofia has witnessed decreasing values, with the average price of a dwelling falling by 0.6 per cent since 2011 and by 41 per cent since the peak, the Global Property Guide reported. Prices now stand at approximately BGN 1,447 (£630.61).

Eighteen provinces also experienced significant price drops in Q3. Values in Montana fell by 13.2 per cent, while Vrasta experienced a 7.3 per cent loss. Pernik property prices also dropped by 7.2 per cent. However, there are areas where moderate gains were noted, including Targovishte (4.5 per cent), Stara Zagora (4.5 per cent) and Veliko Tarnovo (3.5 per cent).

The ease of which European Union citizens can buy property in Bulgaria is now much greater than in years previous, since the Accession Treaty was lifted in January 2012.

Spanish house price stagnation welcomed

Fri, 8 Feb 2013 10:16:09 GMT

Spanish property prices stagnated during January, marking the first month without a decline in three years. Research by Fotocasa.es and IESE Business School revealed that last month the average asking price of a home was €1,890 (£1,631 approximately) per square metre, compared to €1,891 (£1,632 approximately) in December. With the market in freefall since 2008, the news will be widely welcomed, indicating a possible return to stability in the future.

While the annual decline stood at 9.9 per cent, homes in Madrid actually witnessed an increase in value, rising by 0.3 per cent to €2,965 (£2,559 approximately) per square metre. This is 57 per cent higher than the national mean and bodes well for the Spanish capital economically. However, these figures should be viewed with cautious optimism, with the outlook for transactions failing to mirror that of property prices.

Hugo Navarro, a money manager at BPA Global Funds in Madrid, told Bloomberg: "It’s still a very illiquid market, and there aren’t many deals going forward at these prices. The real price, where sales can happen and that would be reflected in official valuations, is still about 20 to 25 percent below these levels." What's more, the Spanish government stated that it would scrap a tax rebate and raise value-added tax on new homes to ten per cent from four per cent as of January. This means that buyers will have been rushing to make purchases prior to this deadline.

Yet it seems wrong not to gain some pleasure from Fotocasa.es' latest figures and there are signs across the board improvements are taking place. In Spain's Autonomous Communities, several have experienced rises in the prices of second-hand houses. These include Murcia (one per cent), Canary Islands (0.7 per cent), Ontario (0.7 per cent), Castilla-La Mancha (0.6 per cent), and Valencia (0.1 per cent). However, Extremadura and Galicia have registered declines in the median price of resale property. Twenty-seven provinces also noted declines in monthly terms, ranging from 0.1 per cent to 1.5 per cent.

Spanish financial reform making 'major progress'

Fri, 8 Feb 2013 10:16:09 GMT

Spain looks like it is finally getting back on the right track, with a team from the International Monetary Fund (IMF) pronouncing that the country's financial reform has made "major progress". In a statement prior to the release of an official report, it was deemed that the "clean-up of undercapitalised banks has reached an advanced stage" and changes to the financial framework had either been "adopted or designed".

This is good news for those looking to invest in Spanish property, indicating that a period of stability could be just around the corner as the country enters the last stage of reform. According to the IMF delegation, the bulk of all measures for the entire program of reform have now been completed.

"Going forward, it will be important to maintain this momentum with strong completion of initiated reforms and continued vigilant oversight, as risks to the economy and hence to the financial sector remain elevated as Spain undergoes a difficult process of fiscal and external adjustment," the IMF said.

Although the country isn't out of the woods yet, there are certainly reasons for optimism. While Spain is undoubtedly blighted by toxic assets and a saturated property market, certain factions are actually performing well. The Real Estate Agency noted that second home demand remains strong in the country, reporting a 90 per cent rise in sale volumes during 2012.

UK buyers are continuing to be among the most active in Spain, but new markets are also entering the fray. A new survey by the Malaga Developer's Association revealed that Russians are now the second biggest group in Marbella investment, overtaking Germans who are traditionally dominant in the property sector.

Daniel Nilsson, regional manager of The Real Estate Agency, stated in January: "The last 12 months have been very positive for us having received over 5,200 enquiries for Spanish property and conducting some 1,600 viewings. From this we have seen the volume of deals and revenue rise by 90 per cent and 104 per cent respectively in 2012 compared with the previous year. Those are not the sales figures of a dead market!"

Turkish property continues fast ascent

Fri, 8 Feb 2013 10:16:09 GMT

The Turkish property market is continuing to grow at breakneck speed, with rising house prices and rents pleasing investors. Suleyman Akbay, managing director of Oceanwide Properties, explained: "In some regions, such as Fethiye for example, we are seeing a three bedroom apartment bought off-plan and completed five years ago now fetching 30 per cent plus above its original purchase price."

In June 2012, Turkey was in fact named as having the third fastest growing property market in the world, overtaking even Russia and China in investment. Knight Frank's Global House Price Index revealed the value of homes in the country had grown 11.5 per cent year-on-year and 3.5 per cent on the previous quarter. This is in part thanks to foreign demand and rising rents for holiday homes. Capital gains on real estate in the country have also risen over the last five years, making Turkey ideal for investment.

Resale properties are performing particularly well, according to Mr Akbay. "I foresee a shift in buying trends of property in Turkey on the horizon, with a boost to the already demonstrably profitable resale market," he said. This will likely be driven by new increases to value added tax in the country, which will cause future off-plan and new build development prices to rise. "The new tax hikes don’t affect older properties as it stands, therefore resale property in Turkey will likely present better value for money for many buyers," explained the managing director.

The decision by the country to open up the property market to overseas buyers from the Middle East and Russia has also had an impact on the speed of growth in the sector. Teamed with the abolition of the reciprocity rule, there is no surprise that the eyes of many investors are now firmly on Turkey. According to the association of real estate investment companies (GYODER), new home prices in the country increased by just over 12 per cent in 2012 and 2013 looks set to be another pleasing year.

Is there trouble ahead for the Cypriot property market?

Thu, 7 Feb 2013 07:00:00 GMT

New figures from the Land Registry suggest that there may be trouble ahead for the Cypriot property market. While low real estate prices in the country are enabling a greater number of foreign investors to buy a home in Cyprus, transaction volumes are actually falling, Cyprus Property News reported. The Land Registry claims that 2013 could see an all-time low for property sales, which were down 53 per cent in January from the same time in 2012.

However, it may be premature to go into panic mode, as figures for January 2012 were arguably skewed, thanks to a rush to deposit contracts of sale in a bid to benefit from the reduction in Property Transfer Fees. What's more, while the country is struggling to recover from the end of the housing boom that halted in 2008, there are signs that the sector is on the brink of a resurgence.

The Cypriot residency scheme is beginning to attract more and more foreign buyers, with China expected to be particularly active. Christos Mavrellis, managing partner with Chrysses Demetriades & Co LLC, told the China Daily in January that Asian developers are planning to buy land in Cyprus or enter into joint ventures with local developers to build homes for Chinese people. Figures showed that Cyprus had received 590 applications from Chinese developers to build homes in the country at the end of 2012.

Nonetheless, others aren't as convinced about the prospect of Cypriot recovery in the near future. While January 2013 figures were expected to be lower than the year previous, they were noted as being at the lowest monthly level on record. Cypriot Property News reported that sales were down in all areas in January, with Nicosia the hardest hit (-75 per cent). Sales also fell by 74 per cent in Famagusta, 70 per cent in Larnaca and 55 per cent in both Limassol and Paphos.

Bad loans still eating into Spanish bank profits

Wed, 6 Feb 2013 07:00:03 GMT

The effects of Spain's bad loans are still being felt in the banking sector, with three of the country's largest lenders revealing that the Spanish property crisis is continuing to eat into profits. In the final quarter of 2012, Banco Popular, Caixabank and BBVA reported significant net losses. A net loss of €2.46 billion (£2.12 billion) for the year was noted by Banco, down from a €480 million (£415 million) profit in 2011. This is the largest drop on record for the bank. Caixabank recorded a 78.3 per cent loss, leaving profits at €229 million (£198 million) for the year, while BBVA had a net profit fall of 44 per cent year-on-year to €1.67 billion (£1.44 billion).

These losses will not be welcomed and are indicative of the damaging effect of the Spanish property market crash. However, it is believed that the rate in which bad loans are increasing is slowing, which is good news for the sector. In fact, it seems as though confidence is slowly returning to sector following the country's request for a €40 million (£34.5 million) European bailout last year. Credit conditions are beginning to ease for lenders and demand is increasing for certain real estate segments.

Even foreclosed properties experienced a year-end rush in 2012, with Bankia announcing that it raised €550 million (£475 million) from selling such units, Reuters reported. This is 19 per cent more than in 2011 and has been attributed to tax breaks currently on offer in Spain. In December alone, Bankia independently sold 1,100 foreclosed properties, which is 70 per cent more than in November. However, to clear distressed real estate off the books, banks are being forced to offer units at significant reductions of between 40 and 60 per cent.

For those looking for Spanish real estate, this creates a wealth of opportunity, enabling those previously unable to afford property to invest overseas. However, the Financial Times claims that the market isn't out of the woods just yet and banks will face further challenges. The Spanish economy looks set to contract sharply this year and financial institutions must ready themselves for the fallout.

Low property prices seen in Spain

Tue, 5 Feb 2013 07:00:01 GMT

Statistics have shown that those looking to purchase real estate in Spain may be better set to pick up a competitive price, when compared to properties in other European Union (EU) countries.

According to figures from the EU statistical office, the prices of properties in Spain fell by 15.2 per cent in the third quarter of last year, the largest drop by any EU nation.

The country's market still remains attractive to many investors in terms of being able to secure properties for a reasonably low price, with a decrease of 1.9 per cent seen in the quarter when compared to the same period in 2011.

The general average of Eurozone countries was found to be 2.5 per cent for the same figure, meaning Spain can still secure a property for less than in many other nations.

What's more, the figures from earlier in 2012 suggest there has been a pattern growing for a reduction in value over the year.

In the second quarter of last year, there was a recorded drop of 14.4 per cent, while in the preceding quarter the fall was 12.5 per cent.

In terms of quarters, Spain's prices were found to be down, on average, by 3.7 per cent in the third quarter of last year, which is above the average decline of 0.7 per cent across the Eurozone.

It was only bettered by the 4.2 per cent and 3.7 per cent figures seen in Romania and the Netherlands, respectively.

A statement released with the figures read: "The evolution of housing prices is important for the purposes of our economy and monetary policy, particularly to monitor macroeconomic imbalances and risk exposure of the financial sector and is relevant to households, to measure changes in prices the largest component of spending and household wealth."

Interestingly, the country with the largest price increases in the third quarter of 2012 was Estonia, which had a rise of 8.4 per cent.

Next up is Luxembourg with 7.1 per cent, while Finland was up 2.1 per cent.

In terms of reductions, Ireland, the Netherlands and Portugal experienced big reductions alongside Spain.

Low property prices seen in Spain

Tue, 5 Feb 2013 07:00:01 GMT

US property market on the road to recovery

Wed, 30 Jan 2013 07:00:15 GMT

The US property market is currently on the road to recovery, according to figures released by the National Association of Realtors (NAR).

According to the organisation, the country's market hit back last year, with 2012 seeing growth in one index of 12.5 per cent, meaning positive news for those wondering whether to buy real estate in New York and other popular areas.

The NAR's data also revealed that the median existing home price for all housing types in the last month of 2012 stood at $180,800 (£114,362), which represents a 11.5 per cent rise on the same month in 2011.

America's property market has not had it easy since the beginning of the global downturn but this is just the latest in a series of positive monthly results.

Indeed, it is the tenth consecutive month of year on year price gains according to the NAR, with its chief economist Lawrence Yun suggesting that consistent demand is one of the driving forces behind these figures.

"Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales," he said.

"The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices."

It wasn't a case of impressive results being seen across the country either, with some regions seeing significantly better performances than others.

The highest gains were 22.5 per cent year on year growth in Phoenix, which were balanced out with the lows of 0.2 per cent depreciations in both Cincinnati and Chicago.

By no means do the figures suggest everything is back to normal for the country's housing market but they do show that it is on the road to recovery.

A recent Global Property Guide article suggested that there were a number of issues which would govern the performance of the sector in 2013.

These included the battle between home ownership and renting, whether or not home prices will be highly sufficient to encourage new builds and the new mortgage standards which come as part of The Dodd-Frank Act.

Is French property in a slump?

Wed, 23 Jan 2013 08:05:14 GMT

French property continues to be attractive to overseas investors but it could be entering a slump. Figures from the FNAIM, the organisation that represents estate agents, revealed that sales fell in 2012 across most regions. Across the board, real estate transactions dropped by 25 per cent, with Normandy and Brittany experiencing the most notable declines. These areas are traditionally popular with British buyers, suggesting the country is becoming less active in the market.

What's more, despite a 0.8 per cent rise in house prices, there are considerable regional variations. Prices increased in Ile de France by 1.5 per cent and Provence, the Cote d'Azur and Champagne Ardennes at 0.7 per cent respectively. Upper Normandy noted a 0.6 per cent rise in property prices, while homes in Langeudoc Roussillon, Rhone Alpes and France Comte increased in value by 0.5 per cent, 0.3 per cent and 0.1 per cent respectively.

However, significant falls were recorded in lower Normandy (5.7 per cent), Brittany (5.3 per cent), Poitou Charentes (4.4 per cent), Pays de la Loire (3.3 per cent), Midi Pyrenees (2.7 per cent), Centre (2.5 per cent), Lorraine (2.5 per cent), Limousin (2.2 per cent), Alsace (1.5 per cent), Bourgogne (1.1 per cent), Auvergne (0.5 per cent) and Aquitaine (0.2 per cent).

Michel Mouillard, economics professor at the University of Paris-X at Nanterre, explained to Property Wire that one of the main reasons behind these substantial price drops is the economic climate and a reluctance of sellers to bring down prices to the level buyers will pay. This creates a state of attrition until one side alters their position. Nonetheless, for domestic buyers to pick up the pace, financial stability and employment will need to be established in the country. Mr Mouillard stated: "We are in deteriorating economic climate. Only the very low bank interest rates have prevented the market from collapsing."

Slowing house price growth is not a new phenomenon either, with the Global Property Guide reporting in 2011 that values were softening. Figures from the National Institute for Statistical and Economic Studies revealed that prices only increased at 1.8 per cent when adjusted for inflation, which is just one percentage point higher than current growth levels.

Mixed growth across UAE

Fri, 18 Jan 2013 08:11:32 GMT

The performance of property in the UAE was mixed during 2012, according to new research. While Dubai's housing market is recovering quickly, its neighbour Abu Dhabi isn't faring as well, the Global Property Guide reported. Reidin.com's all-residential property price index revealed an 18.89 per cent surge in Dubai (18.26 per cent in real terms) during the year to November and a 6.5 per cent drop in Abu Dhabi.

While Dubai's resurgence after three years of falling house prices will come as little surprise to many, with the country recognised as a regional financial and transport and logistics hub, the inability of the UAE capital to match it for growth is somewhat shocking. The Executive Council has recently announced a major spending programme, ploughing money into capital projects in distinct market sectors. What's more, Abu Dhabi is becoming increasingly cost competitive, improving urban infrastructure and quality of life through better accommodation and amenities. However, the country is currently suffering from unemployment.

According to Jones Lang LaSalle, this is causing problems for the real estate sector in the short term, with demand suppressed and unable to keep pace with supply. Major projects are also on their way to reaching completion, which will drive up vacancy rates even further. However, the future is still bright for the country and experts are confident that it will achieve recovery in the medium term. Domestic capital will be the overriding force in the market, while wealth reserves will help Abu Dhabi continue to deliver major projects.

Nevertheless, Alan Robertson, chief executive officer of Jones Lang LaSalle Middle East and North Africa, claims more needs to be done to encourage take-up of new property if the country hopes to match the performance of Dubai. "Until we see more take-up of available space, rents will continue to suffer," he said. "However, as with Dubai, there are examples of where good quality space that is meeting expectations, has attracted quality occupiers and where rents have stabilised."

Cape Verdean economic freedom greatest of all Portuguese language countries

Thu, 17 Jan 2013 07:00:01 GMT

Cape Verde enjoys greater economic freedom than other Portuguese language countries, according to a new report. The 19th edition of the Index of Economic Freedom, compiled by the US Heritage Foundation, revealed the West African archipelago has an economic freedom rating of 63.7. This makes Cape Verde not only the 65th freest out of 177 ranking countries, but first among those nations that share its mother tongue - including Portugal itself - and fourth among 46 sub-Saharan African nations.

The country also beat off the likes of Timor-Leste, Angola, Sao Tome and Principe with their score, which is 0.2 point better than its 2012 rating. Analysts claim this is the result of substantial gains in property rights, freedom from corruption and better management of public spending. These favourable conditions have offset Cape Verde's declining labour output and monetary freedoms.

"Cape Verde’s transition to a more open and flexible economic system has been facilitated by substantial restructuring and the relatively effective rule of law," the authors of the Index report elaborated. "With property rights strongly protected in comparison to other economies in the region, the small island economy’s substantive reforms have reduced corruption and enhanced the quality of the regulatory environment."

These factors bode well for those considering investing in Cape Verdean real estate to capitalise on its upward momentum. In 2011 the Global Property Guide reported that the country was going from strength-to-strength, despite the rest of the world struggling with the global financial crisis. Tourism in particular has been growing at breakneck speed, increasing 25 per cent per annum over the past five years.

This is in part thanks to macroeconomic and political stability, with Cape Verde making increases in income and poverty reduction. The government also promotes free trade and open markets, but close management will be needed to ensure the country stays in positive territory, with the Heritage Foundation noting that public spending and debt are "approaching levels that cause concern".

Spanish new builds experience price drop

Tue, 15 Jan 2013 07:00:10 GMT

In what is known as a highly saturated market, it will not come as a surprise that new build property prices in Spain are continuing to fall. A report from the Sociedad de Tasacion, Spain's equivalent to the Royal Institution of Chartered Surveyors, revealed that in 2012 prices for new homes dropped by an average of 67.9 per cent.

This figure is the reflection of data collected from developers across the country and, while good news for those considering investing in Spanish real estate, will not be welcomed by developers. The average cost of a new build now stands at just over €2,200 (£1,806 approximately). This means that a standard 90 square metre property fetches just £161,000.

However, the Sociedad de Tasacion is positive about the price drop, which will continue this year. Their report claims that lower prices will open up the market to "international investment groups". This means that despite now standing 33.5 per cent lower than the values enjoyed during Spain's property boom in 2007, the low cost of new builds could become an asset.
Increasing overseas interest in Spanish property has long been identified as integral to the country's recovery. In a bid to encourage foreign investment the government is planning the introduction of a residency scheme, which will offer a residency permit to non-EU residents that purchase property over €160,000 (£131,360).

With a standard new build costing somewhere in this region, it will not be surprising to see a rise in demand for such properties from overseas investors in the future. However, with prime developments much sought after, other areas of the market are likely to fall. With competition fierce for high-specification real estate, Spain may be faced with a wealth of vacant mid-range and low-range property. The country already has an oversupply of residential units - including distressed assets held by the Bad Bank - and until such properties are cleared off the books, any form of recovery will be difficult.

Will economic growth in 2013 help boost the Romanian property market?

Wed, 9 Jan 2013 08:08:03 GMT

Romanian property could find itself in demand this year, with experts forecasting economic growth for the country throughout 2013. According to the Erste Group Bank Equity Strategy Q1 2013 report, the "country's fundamentals remain[ed] robust" throughout 2012. "Conclusive progress" was also noted in the consolidation of public finances, which enabled the government to better finance its deficits.

Consequently, it is expected that by the end of the current year, the budget deficit will stand at 2.7 per cent, while GDP will grow by 1.1 per cent. Erste claim this is a "systematic improvement in the fiscal balance since 2010" and those in the property market will no doubt heave a sigh of relief: A stable economy is integral to stimulating real estate activity.

Nevertheless, to ensure the economy continues its upward momentum, fiscal consolidation must continue. This will be helped by the country's new agreement with the International Monetary Fund, the European Union and the World Bank. The document is expected to be signed in April for another one or two years and has been agreed in principle by the president, the ruling coalition and the Central Bank.

Monetary policy easing and real economy improvement is, however, viewed as unlikely in the immediate future, thanks to depreciation pressures, lack of purchasing power in households, and non-performing loans in the banking sector. This means that despite growth improvements, "the Romanian economy will still be trailing behind its potential in 2013," according to Ernst. Therefore, house prices are unlikely to return to pre-recession highs any time soon.

The Global Property Guide reported in September that Romania's real estate market would remain in the doldrums throughout 2012, with the average selling price of apartments in the country falling by 6.21 per cent during the year to August last year. Nonetheless, signs of economic improvement are still good news for the country and once stability returns, property activity is likely to pick up once again.

Ignoring housing development reports caused Spanish market instability, expert claims

Wed, 9 Jan 2013 08:08:03 GMT

Failing to pay attention to reports on housing development has resulted in a surplus of Spanish property, according to one expert. Human geography professor and deputy director of the department of geography at University Autonoma de Madrid, July Vinuesa, told Idealista.com that the construction of homes in the country failed to respond to estimates on housing needs.

Consequently, Spain has been left with more property than demand, contributing to the continuation of the country's real estate woes. In September 2012, the Global Property Guide reported that prices were in freefall. Tinsa’s IMIE general house price index showed a 13.5 per cent year-on-year reduction in Spain's capitals and major cities, while a 13.3 per cent fall was noted across the popular Mediterranean Coast.

While this is good news for investors looking to pick up cheap real estate, with the number of distressed properties on Spanish books growing, the country needs to reverse its fortunes if it hopes to bring stability back to the sector. This includes ridding the nation of some of its surplus homes, which were created during the 2007 boom.

Vinuesa claims that during this period, people ignored official demand estimates and concentrated on "the momentum generated by the expectation of huge gains", Idealisa.com reported. Swept away by investment opportunities, many developers "accidentally" stopped thinking about the sustainability of demand.

However, there is hope for recovery should economic conditions improve. Vinuesa explained that "need" isn't the only predictor of demand and a rush for housing "depends more on the economic conditions of the estimated need" - it doesn't just work on the basis of "a family, a home". This is especially the case in Spain, where overseas buyers are incredibly active. The country has long had a thriving tourism industry, with foreign buyers looking to take advantage helping to sustain demand. British nationals have traditionally been among the most prominent investors and many are still flocking to Spain to exploit record low prices.

Price drop continues in Costa del Sol

Tue, 8 Jan 2013 07:00:01 GMT

Buying Spanish property in the Costa del Sol could soon become even cheaper, with experts claiming that prices are continuing to drop. RR de Acuna & Asociados, one of the country's leading economic consultancies, told the Daily Mail that values could slump by another 50 per cent nation-wide, with coastal apartments and villas the hardest hit.

This fall is unlikely to do little to help the country rid its surplus of real estate, with analysts believing that half-built or unsold holiday homes along the Mediterranean coast will be demolished as demand declines. To prevent such an eventuality, the country must look for ways to attract foreign buyers. Encouraging investment will be key to changing the market's fortunes and the Spanish government is already looking for ways to solve the problem, including the much-discussed residency scheme.

However, Fernando Rodriguez de Acuna, group vice-president, believes the situation may be beyond repair. "The market is broken," he said to the newspaper. "In places like Castellon [near Valencia], where over-development was mad, banks are not financing anything and there is a high probability these properties will never be sold. They will have to be knocked down."

Spain also has a wealth of distressed property and despite the fact major reductions have been made, interest has remained low. Even in popular destinations activity is still slow. "Marbella has already fallen by 50 per cent and prices are going down and down," Mr Rodriguez de Acuna stated.

Latest analyst from RR de Acuna & Asociados suggests that the decline from peak to trough could end up at 75 per cent in some parts of the country. This is thanks to almost two million properties waiting to be sold, with little activity over the last five years to help clear the backlog. However, it isn't just popular resorts like the Costa del Sol that have been hit and Mr Rodriguez de Acuna expects Madrid and Barcelona to witness considerably price plummets in the near future, according to the newspaper.

Property in Spain 'continues to witness decrease in resale prices'

Fri, 4 Jan 2013 07:00:10 GMT

Owners of Spanish property are still witnessing a downward spiral where the country's housing resale prices are concerned.

This is according to a new report compiled by Idealista.com, which analysed more than 320,000 resale properties across Spain in order to gain a comprehensive picture of the current market.

After gathering the information together, the organisation highlighted that Spanish housing resale prices have tumbled by 10.2 per cent on average in 2012.

Those hoping to buy property in Spain will be intrigued to hear though that the price per square metre now sits at €1,873 (£1,521).

In total, 86 per cent of the country's municipalities witnessed a fall in house prices throughout the past year, with the biggest decreases recorded in the Balearic Islands. Here, the average price for property dropped by 12.4 per cent during 2012.

When it came to the state of Spain's provincial capitals, Huesca witnessed an 18.3 per cent decrease in house prices, with Guadalajara faring similarly with an 18 per cent fall. In fact, only Pontevedra remained on a positive path, by actually recording a 1.4 per cent increase in resale price.

Following the changes in resale prices across Spain, San Sebastian has regained its position as the country's most expensive provincial capital, at €4,092/m2.

Bilbao came in second in these particularly rankings, at €3,296/m2, followed by the popular regions of Barcelona (€3,217/m2) and Madrid (€3,209/m2).

At the other end of the scale, lleida has now emerged as the cheapest provincial capital for property, with prices now averaging at €1,056/m2.

The research follows on from claims by Barbara Wood, of Andalucia-based The Property Finders, that people were becoming more realistic when it came to selling property in Spain.

She told Property Wire: "A real feature of 2012 was the increasing number of Spanish sellers finally coming out of denial and accepting offers they were previously turning down."

Turkish property bucks Europe's downward price trend

Fri, 14 Dec 2012 07:00:01 GMT

Turkish property is proving the exception to the rule of late, with real estate prices across the rest of Europe continuing their downward trend. According to the latest report by the Global Property Guide, the continent is currently in the "eye of the storm", but a few countries have escaped this trajectory, including Turkey, Austria, Latvia, Germany, Iceland and Finland.

In Q2 2012, house prices in Turkey increased by 1.03 per cent, when adjusted for inflation, quarter-on-quarter. This rose further in the penultimate quarter of the year, enabling the country to continue its climb up the Global Property Guide Index. Turkey has gone from 27th in the table with negative growth of 4.80 in 2010, to almost five per cent positive year-on-year growth in Q3 this year, catapulting it into the top ten.

The Association of Real Estate Investment Partners (GYODER) index, in conjunction with Garanti Bank and Reidin, also notes considerable improvement in the state of the Turkish property market, recording price rises of between ten and 12 per cent per year (not adjusted for inflation).

New properties in the country are also performing well, according to the results of the REIDIN.com-GYODER New Home Price Index. In October 2012, a 0.73 per cent increase with respect to the previous month was recorded. This equates to a 10.25 per cent rise since the same period in 2011.

The Asian side of the country has seen the most activity, with prices rising by 1.69 per cent, compared to just 0.15 per cent on the Istanbul European side. October also noted a 0.96 per cent jump in 1 1 flat type, a 0.78 per cent increase in 2 1 flat type, a 0.82 per cent rise in 3 1 flat type and a growth of 0.67 per cent in 4 1 flat type, month-on-month.

Smaller-sized properties were the top performers, with 51-75 square metres increasing by 1.05 per cent, followed by 76-100 square metre properties at 0.84 per cent, and a 0.72 per cent rise of 101-125 square metres.