The ECB tightens credit standards

Average commercial prime yields stand at 7.52%

Bulgaria’s economy will decrease by -6.3% this year

No sector is safe in Dubai’s downturn

Australian house prices increase by +3.3% in Q2

Demand for property in China from overseas investors

The ECB tightens credit standards

Euro-zone banks tightened credit standards again in the second quarter of the year and expect to continue tightening in the coming months, but at a slower pace, according to the European Central Bank (ECB).

The EBC believe that banks saw a slowdown in demand for loans from firms in the second quarter, but expect a small pickup in the third quarter. Credit standards for housing loans were also tightened by banks as demand for loans turned positive, the ECB data showed.

A further tightening in standards is expected in the third quarter but at a slower pace. Demand for housing loans is expected to return to negative territory. Below is a table showing the net percentage of banks reporting and expecting changes to credit standards and loan demand in the ECB survey.

Average commercial prime yields stand at 7.52%

Average commercial prime yields across Europe now stand at 7.52%, with Western yields (excluding the UK) averaging 6.65%, according to new research from Cushman & Wakefield (C&W).

This compares to average yields of 6.97% in the UK, 8.63% in Central Europe and 12.86% in Eastern markets.

As a result, the yield differential between west and east has widened to 6.21% versus 4.23% a year ago. Despite the opening of this yield differential, investor activity in Eastern markets remains very subdued, according to C&W. Across the sectors, investors are still very much focused on core Western markets with demand most evident in markets such as the UK which have seen the most extensive pricing corrections.

This is not a universal trend, however, and is not yet evident in Spain and many of the Nordic markets for example, where, despite a greater than average shift in yields, increased interest over recent months has yet to translate into deals, as investors await evidence that pricing is set to stabilise.

Investment volumes in the second quarter rose 2.5% on the first three months of the year, driven by increased activity by foreign buyers (up nearly +16%), in core Western markets. At € 11.97bn, volumes were nonetheless just 41% of the average for 2008 and only 19% of the average for the market’s peak year in 2007.

Bulgaria’s economy will decrease by -6.3% this year

Bulgaria’s economy is in a worse condition than the previous Government tried to portray, according to new finance minister Simeon Dyankov, as he believes that Bulgaria’s economy will decline this year by -6.3%.

No sector is safe in Dubai’s downturn

A report by Asteco on the Dubai property market in the second quarter of this year has concluded that some residential areas may have already hit the bottom of the pricing cycle.

Across the city as a whole, average prices continued to fall during Q2 2009. Prices for apartments fell by -15% (to approximately Dhs900 per square foot), compared to Q1, while villa prices fell by an average of -13% (to approximately Dhs980sq ft), according to Asteco.

In addition, rents in Dubai continued to fall in most areas. Lease prices for apartments fell by an average of between 16-26%, compared to similar properties in Q1. Rental prices for studios fell the most on average, at -26%. Average rents for two and three-bed apartments fell by almost -19%.

The commercial sector didn’t fare any better, with average asking prices for office spaces falling by -24% over Q2 to Q1.Rental prices also dropped, as landlords saw an increase in supply coming onto the market combined with a slow down in demand. Average annual rates fell by -20%, although the report noted that with Dubai Metro due to come online in September, areas serviced by the route - such as Sheikh Zayed Road properties - would see increased stability.

Australian house prices increase by +3.3% in Q2

Australian house prices rose by +3.3% across the country in the June quarter, in the strongest quarterly growth in house and unit prices since December 2007, according to Australian Property Monitors (APM).

The recovery was led by the top-end of the market, with median prices in the more expensive half of the market in Sydney, Melbourne and Brisbane growing by nearly double the rate of those in the bottom half. The results indicate the property market is now in recovery mode with prices having reached their bottom, according to APM.

The two largest property markets, Melbourne and Sydney, recorded price increases while Brisbane and Perth were the only markets to see prices fall back to June 2008 levels.

In Melbourne, the median house price increased by +5.8% during the quarter, with prices up by +4.1% for the 12 months ending in June.

In Sydney, the nation’s largest property market, house prices grew by +3.7% in the June quarter, the first quarter of median price growth for the city since December 2007.

However, Darwin experienced the strongest results, with housing prices growing by +11.2% in the quarter contributing to a 12-month increase of +17.3%. Another strong market was another strong market, with prices rising +7% in Q1. Canberra house prices rose by +2.4%, while Adelaide recorded a +2% rise in housing prices.

Brisbane prices rose by +1.7% in the June quarter, but prices still remain down by -4.5% for the 12 months ending in June. Perth housing prices recorded a -0.8% decline in the quarter, contributing to an annual fall of -4.4%.

Demand for property in China from overseas investors

Demand for property in China is reportedly booming, following the country’s decision to revoke the ban on overseas nationals buying property on the country’s mainland.

According to consultancy firm, Landpower, Hong Kong nationals bought between 11,000 and 12,000 residential units in the mainland in the first half of 2009, up +23% from the same period last year. Increasing residential prices in China has led to calls for banks to curb mortgage lending.

The price of new residential property in 36 Chinese cities in China rose by +6.3% in the last year, according to data compiled by the National Development and Reform Commission.

With genuine fears that a property bubble may be forming, the Chinese Government may soon step in and introduce fresh regulations to help prevent residential prices booming on the back of greater speculative activity in the residential sector.