Poland keeps interest rate the same

Norway first EU country to put up interest rates

Irish commercial property continues its decline

Global lettings appear more buoyant

Increasing Australian property prices

Mortgage applications up in the USA

Poland keeps interest rate the same

The Central Bank in Poland has indicated that the country’s economy is on its way to recovery after the bank’s governor announced on TV station TVN CNBC that there would be no rate cuts until early 2010.

While several policymakers have said that rates were likely to stay flat for some time to come due to high inflation and improving growth, Governor Slawomir Skrzypek has continued to underline the bank's aim was still towards easing.

Skrzypek said: 'The MPC's aim was to give the market a clear signal that there will be no rate cuts until the end of the current MPC's term,'

The interest rates have remained unchanged at an all-time low of 3.5%, which analysts said reflected a switch to a neutral bias from previous easing.

Norway first EU country to put up interest rates

Norway’s central bank in November became the first European country to increase its interest rates since the beginning of the credit crunch, by raising rates by 0.25% to 1.5%.

The increase was anticipated to happen in October and as such saw the country’s currency (the Krone) lose ground against the euro and the dollar. However the Krone is still up by +18% against the dollar in 2009.

Like Australia, Norway's economy has been buoyed by demand for the commodities that it exports, notably oil. Underlying inflation has climbed to an annualized 2.4% in September and the unemployment rate is a scant 2.7%.

Norway's financial sector also hasn't been hit as hard as others around the world from the credit crunch.

While Norway is tightening and Australia is poised to make its second hike next week, other major central banks including the U.S. Federal Reserve, the European Central Bank and the Bank of England aren't seen moving anytime soon.

Irish commercial property continues its decline

Irish commercial property has continued its downward spiral in Q3 2009, according to data from IPD, as total returns were on all property was -6.7% for the quarter, down from -6.1% in Q2.

The office market in this quarter saw the biggest decline with total returns of -6.8% and a fall in market values of -8.7%. The retail sector had a return of -6.5%, making it the only sector which showed a deceleration in negative returns after seeing -8.3% in the previous quarter. Grafton Street in Dublin was the hardest hit retail location as its total returns for the year to September 2009 were -40.6% in comparison with all property returns of -33.9%.

Angela Sheahan, IPD head of indices, said: “The Q3 results show a mixed picture with the decline in values in Office and Industrial accelerating while Retail appears to have hit the bottom of the curve and started to improve. The year-end results will be very interesting to see if things continue to deteriorate or if we have reached the inflection point.”

Capital values have fallen -53% since their peak in September 2007.

Global lettings appear more buoyant

According to the latest Royal Institute of Chartered Surveyors (RICS) Global Property Survey, the mood amongst real estate investors has picked up with capital values expected to increase in several countries including Brazil, Hong Kong, South Korea, China and India.

Tenant demand in particular is looking less negative than previously throughout the world, up until the end of the year, with Latin American and Asian countries having favourable readings for the rental outlook. In Hong Kong for example during Q2, 67% of those surveyed expected rents to decrease, however in Q3 a net balance of 16% expect rents to increase by the end of 2009.

Simon Rubinsohn, RICS chief economist, said: “The rebound in Asian economies is clearly being reflected in the more positive responses to both rental and capital value expectations throughout the region. By way of contrast, the relatively sluggish economic revival though much of Europe and the US is consistent with the more downbeat results for these regions.

“This contrast could become even more pronounced through 2010 as any unwinding of the monetary and fiscal stimulus presents a further challenge to the tentative recoveries being experienced in most western economies.’’

Increasing Australian property prices

With a property index showing a +3.7% rise in real estate prices, The Reserve Bank of Australia is expected to increase interest rates as residential property prices are now at a six-year high despite a fall in first time buyers.

Figures from the Australian Property Monitors (APM) showed that Melbourne has grown the fastest with prices increasing by +6.1% in Q3 2009, the biggest increase since 2003. The average house price in Melbourne in September was $487,249, compared to $437,560 in September 2008 which is a +11.4% rise in 12 months. Hobart had the second highest rise, up +5.4% for the quarter, followed by Canberra with +4.8% rise and Sydney with +3.6%.

According to APM, he rise in national house prices was led by explosive growth in the more expensive suburbs, which had started in capital cities and spread to the rest of the country.

Prices in Sydney’s eastern suburbs and lower north shore had been rising since June while prices in some expensive suburbs, such as Point Piper and Bronte in Sydney, had taken the hardest hits, falling by up to 30% since 2007, according to the index.

Some experts are warning that the upturn in the market is not sustainable as it is not underpinned by first time buyers.

Mortgage applications up in the USA

According to data from the Mortgage Bankers Association (MBA), applications for mortgages in the USA went up +8.2% which is the first time in the four weeks prior to the end of October 2009, as interest rates on 30-year loans went below 5%.

The MBA said 30-year fixed-rate mortgage borrowing costs, excluding fees, averaged 4.97%, down -0.07% on the week starting 19 th October. The rate however is still higher than the all-time low of 4.61% set in the week ending 27 th March, with interest rates still well below the 6.47% set in October 2008.

The National Association of Realtors stated that pending sales of homes previously owned rose in September to their highest level in almost three years ahead of the 30 th November expiration of the tax credit, which the federal government provides first time buyers with $8,000, has helped pave the way for stabilisation.

The Senate plans to extend the popular home-buying tax credit to April 2010 and at the same time to expand its scope, is expected to be backed by the U.S. House of Representatives, House Majority Leader Steny Hoyer said.