Ireland’s house prices may decline by -45%

Demand for office space in Moscow picks up

“The worst is over for Hungary’s property market”

Australia stages a ‘surprising’ recovery

Property values increase in Lebanon

Canada’s commercial property market is recovering

Ireland’s house prices may decline by -45%

According to Fitch Ratings, Ireland’s recession will see gross domestic product (GDP) contract by -7-8% this year and this will force house prices to decline by approximately -45% from the peak of the late 2006 market.

Fitch cited research from the Permanent TSB/Economic and Social Research Institute which showed house price declines have so far fallen -24% from a December 2006 peak.

In a statement, Alastair Bigley, head of Irish RMBS at Fitch, said: ‘Tax rises, high unemployment, wage deflation and property supply overhang continue to undermine the country’s property market.’

Fitch, which cut Ireland’s AAA ratings by one notch to AA-plus in April, said the fall in property prices will be exacerbated by an expected increase in the cost of funding to Irish financial institutions.

Demand for office space in Moscow picks up

Demand for office space in Moscow is picking up gradually due to a fall in both rental rates and supply, according to Cushman and Wakefield (C&W).

Big deals of over 2,000sqm have started coming back to the market as tenants’ activity has been boosted by the slide in rents. Andrey Malkov, C&W analyst, said: “During the last several months, we have seen an increase in demand for office space. Before the crisis, over 60% of the overall demand was supported by foreign companies, but the current level of demand is being maintained mainly by Russian firms. Not many of them are to be counted among the wealthy so that demand for office space in 2010 is likely to be limited.”

The total of leased or purchased offices increased in September against the previous month and came up to about 70,000sqm. Some stabilisation in rents is settling in, with the average asking rent at $690 and $350sqm pa for A and B+ classes. In construction, September data showed the total amount of new-build quality office was about 24,000sqm. At the same time, the vacancy rate fell to 23.5% for prime offices, down -1% from August.

“The worst is over for Hungary’s property market”

Ecostat’s Real Estate Barometer, a measure of sentiment on Hungary’s property market, measured 35.4% in the third quarter, up +1.54% from the previous quarter, and rising for the first time in a year, according to Ecostat.

The worst is over for Hungary’s property market but it will still stagnate for the coming six months, according to Pal Belyo, Ecostat’s head. The Ecostat retail index increased by +6.35% to 41.4% in Q3, suggesting that home sales will increase in the coming months, if only modestly.

Demand is highest for homes around 50sqm. Belyo said home prices have risen +10% in real terms over the past three years. Property investors are pessimistic, however, as real estate agents do not expect the market to contract any further. The index for developments by local governments dropped further, and few companies plan property developments for their own purposes.

Australia stages a ‘surprising’ recovery

Similar to the UK, Capital Economics believe that house prices in Australia have staged a ‘surprising’ recovery this year.

Between the first quarter of 1997 and the first quarter of 2008, Australian house prices rose by 175% which was smaller than the 230% increase in prices seen in the UK but smaller than the 130% rise seen in the US. However, according to Capital Economics, when measured relative to the growth in average incomes, the boom in Australia was larger than both. Indeed, on this basis it was among the largest in the world. However, house prices in Australia have barely corrected and, in sharp contrast to the US, where house prices are also now rising, the HPE remains close to its all-time high.

Capital Economics believes that one popular explanation for Australia’s house price boom is strong population growth which averaged at 1.4%pa over the last decade, compared to +1% in the US and just 0.5% in the UK. However, the correlation between population growth and real house price growth in the following years is not only weak, but also negative – the opposite of what is expected.

All else equal, in the long-term, a persistent undersupply of housing will result in higher house prices than would otherwise have been the case. Yet in the short-term, housing demand is determined by the number of people able and willing to buy given prevailing prices and credit conditions.

Capital Economics concluded in the report: ‘This year, UK and Australia house prices have both been buoyed by improving economic data and ultra-low interest rates. But this cannot last much longer. Either the recovery will fade or interest rates will rise. In the UK, we think that the recovery will fade. In Australia, by contrast, interest rates are now rising. The bottom line is that both markets look vulnerable to renewed price falls next year.’

Property values increase in Lebanon

Real estate values in Lebanon have increased by +9% in the first eight months of this year and are projected to rise by +10-15% each year until 2013.

Canada’s commercial property market is recovering

Canada’s commercial real estate market is recovering after an 18-month slump as new transactions indicate the industry has de-coupled from its struggling U.S. counterpart, according to RealNet Canada Inc.

Investments in commercial property in the Greater Toronto Area rose +46% in the third quarter from the previous period to C$1.31bn and the number of transactions increased by +20%.

There were 27 deals valued at the critical C$10m threshold in the third quarter compared with 17 in the previous quarter, according to the newspaper. The statistics indicate the national industry is on the mend, although it may not be a full- blown recovery, according to George Carras, RealNet’s president.