Is the worst of the European property crash over?

Tax revenue drop blamed on decrease in property sales

A quarter drop in new construction projects

South Korea’s economy expands at its fastest pace in six years

US residential prices experience first monthly increase in May

Record number of repossessions in New Zealand

Is the worst of the European property crash over?

The worst of the property crash in Europe could be over, according to Union Investment’s Climate Index, which is an index of attitudes towards property investment.

The index rose for the first time since autumn 2006 in France and the UK. The survey suggested this showed growing confidence among investors with regards to their own business prospects as well as the wider property market.

The UK saw a particularly steep rise in the index, by 12 points to 65.5. In Germany, the index remained the same at 62.1. In France, there was a slight increase of 1.8 points to 63.4.

The ‘expectation’ factor was the major driver for the positive performance of the index, particularly in the UK, where it climbed 19.6 points to 57.7. Around 63% of UK investors were upbeat about their prospects, but only 36% felt the same in Germany and 30% in France.

Some 87% of Brits expected a rise in investment from overseas in the UK market. A large number of investors were also returning to property as an investment class, the survey found. Some 42% planned to invest significantly more in property in the near future, compared to 21% in December 2008 in the UK. Both France and Germany also saw the percentage of people planning to invest rise, to 41% in both countries.

Tax revenue drop blamed on decrease in property sales

A €4.2m drop in tax revenue from Gozo, Malta, has been attributed to a decrease in property sales, according to the finance ministry.

The drop in sales led to a corresponding decrease in capital gains revenue, leading to a total -26% drop in collected income taxes in Gozo, from €16.2m in 2007 to €12m in 2008.

In fact income from capital gains taxes alone – which is paid on profits from property sales – in Gozo decreased from an all time high of €8.1m in 2007, to €5.2m in 2008, according to Malta Today.

Between January and March 2009, capital gains taxes from Gozo contributed a mere €1.3m to the government coffers, an indication that the number of property transfers remains low on the sister island.

A quarter drop in new construction projects

If the Bulgarian construction sector was to keep its Q1 development pace, the industry would see a -25% drop in the number of new construction projects to come to the market in 2009 compared to the year before, according to Arco Real Estate.

Sofia was headed for a -32% year-on-year drop, whereas Varna and Bourgas faced declines of 32% and 14% respectively, according to the agency.

The forecast was based on data from the National Statistical Institute (NSI), which showed that 3,897 new housing units had come to market in the first quarter of 2009, against 20924 for all of 2008, according to Bulgarian daily Dnevnik.

The number of new building permits reflected the trend, with the number of permits issued halving in the first quarter, compared to the same period of 2007, when the property sector was at its peak, Dnevnik said.

Arco Real Estate warned that this could create a vacuum with no finished new housing units appearing on the market in 2010.

South Korea’s economy expands at its fastest pace in six years

South Korea ’s economy expanded at the fastest pace in almost six years last quarter as exports and household spending jumped.

Gross domestic product (GDP) rose by +2.3% from the first quarter, when the nation skirted a recession by growing +0.1%, according to the Bank of Korea. That was slightly better than the +2.2% growth estimated by economists.

South Korea joins China and Singapore in leading a regional rebound, marking a turnaround for an economy whose currency tumbled -26% last year on concern companies would be unable to repay foreign debt.

US residential prices experience first monthly increase in May

According to Standard & Poors/Case-Shiller index, residential prices in the US increased by +0.45% between April and May, which is its first monthly increase in almost three years.

However, the main index reported a -17.06% drop in house prices in the 20 major urban areas it covers, on a year-on-year basis in the month of May. Although the year-on-year decrease remains a significant fall, it was the fourth month in a row that the pace of annual decline slowed, suggesting the market may have bottomed out.

The Case-Shiller index came after a US Government report showed a +11% increase in new home sales in June. However the mood in the housing market – an important barometer of the US economy – does not appear to be translating into the wider economy.

The latest Conference Board index of consumer confidence fell by more than expected in July to 46.6 from 49.3 in June, on a 0-100 scale whereby anything above 50 is positive.

It was the second consecutively monthly fall for the index, which sunk to an all-time low in February.

Record number of repossessions in New Zealand

An exceptional number of New Zealand property mortgage sales, in light of record high levels of repossessed homes in the country, are making it harder for existing homeowners to sell their properties, according to data released by Terralink International.

Too many property investors overstretched themselves during the boom years by purchasing multiple investment homes in New Zealand, and are now paying the ultimate price by having their residential units ceased by the banks.

Terralink International’s research shows that of the total mortgagee sales, 81% of them were for individuals or companies, who owned more than one property.

The majority – 75% - of the mortgagee sales were located in the North Island, with property in Auckland constituting 44% of the residential stock. Nevertheless, parts of the South Island had also been hit hard in May, with Otago experiencing a 60% rise and Canterbury a 42% increase on April’s mortgagee sales.