Bulgarian property prices could drop dramatically

Some 54% of landlords in Spain are not paying taxes

“Greece is moving in the right direction”

US economy sees fastest growth since 2003

The number of Australian mortgages at five-year low

India’s economy grew +6.7%

Bulgarian property prices could drop dramatically

Bulgarian banks could determine whether the country’s depressed real estate sector sees prices fall even further, as there are concerns that they may start to sell off foreclosed properties, according to Address, a Bulgarian real estate company.

It claims that the banks combined with foreign real estate investors had a major impact on the country’s property market by offering low interest rates at a time when home ownership was encouraged. However, the global economic downturn has resulted in a drop in incomes with a rise in loan defaults and foreclosures, according to Address.

Address believes that if 2010 proves to be a more difficult year than 2009, the banks might change policy despite trying to stay away from an overall policy of foreclosing, and have a significant effect on the market.
 
The company stated that if banks start selling foreclosed properties in search of quick returns there is a serious risk that the property market could collapse altogether.

Some 54% of landlords in Spain are not paying taxes

Over half the landlords in Spain are not paying taxes as the rental market expands, which is depriving the financially strapped government of revenue every year, claims the Gestha union of tax inspectors.

Despite an increase in rental properties nationwide, the country hasn’t seen an increase in tax revenue and the Gestha union of tax inspectors estimates that there is a shortfall of €2.5bn, as landlords are taking rent payments in cash to avoid paying tax.

According to Fernando Encinar, co-founder of Idealista, Gestha estimate that 54% of landlords are ducking taxes actually falls short of the true figures, which are set to grow further.

There has been a drop in house prices since Q2 2008 so many people who bought homes as investments are seeking tenants for their properties rather than selling them at a loss. At the same time, more Spaniards are trying to lease homes after they were priced out of the market in the years before the crash, making it easier for landlords to strike deals that don’t involve the taxman.

This is clearly illustrated as the number of properties for rent increased +18% to 2.2m in 2008, according to data from Spain’s Housing Ministry, whilst rental income declared by landlords rose by just +0.1% over the same period, a report by the Spanish tax office shows.

In 2008, a tax break was adopted that gives landlords a 100% tax break if they rent to tenants who are under 35, however as the majority of leaseholders are over 35, landlords are concerned that the break will be repealed in a couple of years, once they’re all registered with the state.

The penalty for avoiding tax on rent is a fine equivalent to 150% of the unpaid amount, according to the Spanish tax office, and the tax must be repaid.

“Greece is moving in the right direction”

The European Central Bank’s (ECB) president Jean-Claude Trichet has cautiously backed Greece's austerity measures, while reiterating that nations must respect the European deficit and debt limits as concerns mount over the debt woes across the periphery of the 16-nation Euro- zone.

After the ECB chief had announced that its key lending rate would remain unchanged at a record low of 1%, he stated that he was confident that Greece would "take the appropriate measures" needed to put its budget in order having run up a deficit of nearly 13% in 2009. It has vowed to cut it to 2.8% by 2012.

Trichet offered little deviation from his January assessment of the economy, indicating that the recovery was likely to proceed at a "moderate pace" but could prove "uneven”. He also stated that annual inflation is likely to remain around 1% in the near term, well below the ECB's 2% target and that medium term inflation expectations remain "firmly anchored”.

US economy sees fastest growth since 2003

The US economy has raced upwards to an annualised +5.7% in Q4 2009 and has shocked forecasters with the fastest growth since 2003.

This is despite the world's biggest economy contracting by -2.4% in 2009, the biggest decline since 1946.

Christina Romer, White House economist, said: "It is important not to read too much into a single report, positive or negative, but this is the most positive news to date on the economy. There will surely be bumps in the road ahead. Nonetheless, today's report is a welcome piece of encouraging news."

The Bureau of Economic Analysis, which has released the data, emphasised that the fourth-quarter advance estimate was based on incomplete information and was subject to further revision.

Growth in the third quarter was originally estimated at an annualised rate of +3.5%, but was revised down to +2.2% after more information was received.

The number of Australian mortgages at five-year low

The number of mortgages being taken out in Australia has fallen to a five- year low, after the central bank increased lending rates and house prices climbed, according to Australian Finance Group Ltd (AFG).

The company saw a -19% drop in the number of mortgages arranged in January 2010 by its brokers in comparison with January 2009 and this was the lowest number since 2005.

Brett McKeon, AFG’s managing director, said: “The impact of three rate rises in quick succession has had a far more dramatic effect on property buying than anything we saw during the global financial crisis - people are not moving or upgrading their family homes. They’ve slammed the brakes on borrowing.”

Australia ’s central bank raised its benchmark interest rate to 3.75% in December 2009, its third increase in three months, as evidence of an economic recovery mounted. Median house prices in Australia’s eight state and territory capitals climbed by +4.8% in Q4 2009 to AU$525,524 and were +12% higher than 12 months previously.

India’s Central Statistical Organisation has announced that the country’s economy has grown by +6.7% in the fiscal year through March 2009.

The government agency stated: ‘The base year is changed periodically to take into account the structural changes that take place in the economy and to depict a true picture of the economy.’

The economy had previously grown +9.2% in the year to March 2008, after an earlier estimate of +9% as the statistics agency changed the base year it uses to calculate the data to 2004-2005 from 1999-2000.