More misery for Spanish property market

Mood in Germany’s property market picks up

Average Irish house prices fall by -1.9% in April

One in eight US households are in trouble

“Thailand’s economy is over the worst”

Property prices increase in the UAE

More misery for Spanish property market

Spanish house prices will fall -10% this year and -12% next, setting the scene for recovery from 2012, according to Spanish bank BBVA.

BBVA said prices would fall -30% from their 2007 peak to the end of 2011, compared to a trebling of prices in the 10 years to 2007. Sales have tumbled -34% in the year to March according to Government figures, amid Spain’s worst recession since the 1936-39 Civil War and tight lending conditions.

Mayte Ledo, chief scenarios economist at BBVA’s research department, said in a presentation to journalists in Madrid: “It seems reasonable to assume that a good part of the adjustment could be over by 2012.”

The bank, Spain’s second biggest, said it estimated Spain had approximately 1.2 million unsold new homes after a speculative bubble encouraged a decade of rampant building along the coast and ringing almost every major town and city. According to BBVA, the market would only start to absorb the extra stock from the first quarter of 2010 as builders request less than 200,000 new home permits this year and next compared to over 800,000 in 2006.

Lower interest rates will improve affordability and encourage demand, particularly since Spanish banks were largely passing on most of the ECB’s rate cuts to borrowers, almost all of whom are on variable rates in Spain.

Mood in Germany’s property market picks up

According to King Sturge’s Real Estate Climate survey which forms part of its Real Estate Economy Index, The mood in the German real estate industry perked up in May as the index rose to 55.6 points, an +8.2% improvement on the April figure of 51.4 points.

The improved mood is reflected in all the indicator values, which rose for the first time this year. The report, conducted on behalf of King Sturge by consultancy firm BulwienGesa, is based on a survey of 1,000 real estate experts.

Sascha Hettrich, managing partner of King Sturge Deutschland said: “It is still too early to say whether this represents a shift in trend, but if nothing else, it clearly checks the downturn and signals a reversal in the growth direction. Similarly, it remains to be seen in the months to come whether we are looking at a sustainable development or just a brief interim surge.”

Average Irish house prices fall by -1.9% in April

Average Irish national house prices fell by -1.9% in April according to the latest edition of the permanent tsb / ESRI House Price Index, which compares to reductions in March (-1.0%), February (-0.8%) and January 2009 (-1.4%). 

Measuring the rate of growth in the 12 months (year-on-year) to April, national prices were down by -10.7%.  This compares to a decline of -10% recorded in the 12 months to March 2009.  In the first four months of 2009 national house prices have fallen by -4.9% which compares to a reduction of -3.3% in the same period in 2008, making the average price paid for a house nationally in April was €248,640, compared with €261,573 in December and a peak of €311,078 in February 2007.

The permanent tsb house price index is a 3 month moving average. The index is based on the agreed sale price and is calculated using data from mortgage drawdowns. Therefore a lag may exist between the time the sale price is agreed and when the mortgage is drawn down.

One in eight US households are in trouble

One of eight US households with a mortgage ended the first quarter late on loan payments or in the foreclosure process in a crisis that will persist for at least another year until unemployment peaks, according to the Mortgage Bankers Association (MBA).

US unemployment in April reached its highest rate in more than 26 years and is still rising, helping propel mortgage delinquencies and foreclosures to record highs.

Such economic weakness drove up foreclosures of prime fixed-rate loans, which are made to the most creditworthy borrowers. The foreclosure rate on those loans doubled in the last year and represented the largest share of new foreclosures in the first three months of this year.

The pace of defaulting mortgages jumped despite various moratoriums and government steps to cut home loan rates. Rates on 30-year mortgages averaged 5% in March, 5.13% in February and 5.05% in January, according to Freddie Mac. A year earlier, the average monthly rates were bumping up closer to 6%.

A record 12.07% of loans on one-to-four unit residences were at least one payment late or in the foreclosure process, on a non-seasonally adjusted basis. Prime fixed-rate loans comprise 65% of the $9.9tn in outstanding first mortgages, according to the industry group. Foreclosure actions were started on an all-time high 1.37% of first mortgages in the quarter, a record increase from 1.08% the prior quarter.

“Thailand’s economy is over the worst”

Thailand ’s economy is over the worst of its first recession in a decade and government spending on “shovel-ready” projects will help spur demand and create jobs, according to Korn Chatikavanij, finance minister.

Thailand ’s government began pumping cash into the economy with handouts to the nation’s poorest in April after the global recession led to a collapse in exports, and violent political protests sapped domestic confidence. While the economy isn’t likely to return to growth until the fourth quarter, the central bank has said there are signs the worst is over.

Gross domestic product (GDP) decreased by -7.1% in the first quarter, pushing Thailand into a recession. The economy’s showing a more “moderate contraction,” according to the Bank of Thailand, when it kept borrowing costs at a five-year low of 1.25%, ending its most aggressive string of interest-rate cuts ever.

Property prices increase in the UAE

According to HSBC, property prices in the United Arab Emirates (UAE) increased in April and May.

Prices in Dubai and Abu Dhabi rose by +4% in April compared with March and 5% in May, but HSBC warned that it was too early to call it a trend.

A survey of brokers by the bank also confirmed that prices have started to stabilise on the back of renewed interest and sellers pulling their properties off the market of putting them up for lease.

However, compared with the peak in the market last September, property prices are considerably lower as agreed prices are down by -23% and asking prices were -65% lower.

However compared with the peak in the market last September property prices are still considerably lower. Agreed prices are down 23% while asking prices were 65% lower.

The result is a lot of price confusion in the region's real estate markets. Panic selling by Dubai property speculators is driving prices down, eroding confidence and making banks reluctant to lend, according to Mohammed Nimer, CEO of MAG Group Properties.

He believes that a mass sell-off by speculators has contributed to Dubai's housing crash. 'Speculators were originally responsible for driving property prices to unrealistic levels. Now, although they are on the receiving end of the slump in prices, they are still blighting the real estate landscape by panic selling and undercutting the fair market price,' he said.