The Euro-zone’s GDP is forecasted to fall

Baltic economies expect recovery in late 2010

Hungary lowers interest rate to 5.5%

South African house prices rise +2.4%

One in four homes lie empty

Australian auction sales at 73%

The Euro-zone’s GDP is forecasted to fall

Forecasts for gross domestic product (GDP) in the Euro-zone has been downgraded from 1.5% to 1% in 2010 and 0.5% in 2011, with four member states seeing a decline in GDP in 2011 according to Capital Economics.

The analyst previously indicated in December 2009 that only Ireland would do so. However, due to cutting budget deficits in Portugal and Greece, both economies will suffer with GDP forecasts for the next two years to 2%pa and 3%pa respectively. Capital Economics has also lowered its forecast for Spain for similar reasons by 1%pa.

Fergus Hicks, property economist at Capital Economics, said: “The weaker economic growth outlook suggests that the risks to our rental value forecasts in many markets now seem to lie to the downside. For the time being, though, for Germany, Austria, Italy and Spain, we do not feel that the economic forecast revisions warrant a change to our rental value forecasts, especially as, if anything, rental values held up a touch better last year than we had expected. However, the same cannot be said for Greece and Portugal.”

Office rents in Greece will fall by -18% by the end of 2011 because of a weak outlook for employment, this is a change from the -10% previously indicated. Retail rental values have already fallen -20% so are forecasted to fall by 4% less.

Portugal meanwhile is expected to see a lower vacancy rate of 9%, giving a -3% reduction in the forecast for office rental values. However due to the negative impact of fiscal tightening on household incomes, and the relatively high shopping centre pipeline relative to stock, a -10% drop in retail rental values over the next two years is predicted, double the -5% fall in stated in previous forecasts by Capital Economics.

Baltic economies expect recovery in late 2010

The economies and property markets in the Baltic region of Central Eastern Europe (CEE), although currently vulnerable, are expected to start their recovery by the end of 2010 according to think-tank, Re&Solution Group.

The advisors believe there are plenty of secure investment opportunities for commercial property in the Baltic region.

Rièardas Èepas, CEO of Re&Solution, said: “We do not expect this year to be less challengeable. Nonetheless we strongly believe it will be a ‘restarting’ year, bringing back occupier confidence and investor interest.”

Hungary lowers interest rate to 5.5%

The National Bank of Hungary has cut its interest rate for the ninth consecutive time and it now stands at 5.5%.

Analysts at RBC Capital Markets, said: "The relative strength of the Hungarian forint, the dire state of the domestic economy and better inflation news all support the case for lower interest rates."

Hungary's economy fell by -6.3% in 2009 and had an annual inflation rate of 5.7% in February 2010, down from 6.4% the month before.

The bank stated that although higher taxes and state-controlled prices were putting upward pressure on inflation, persistently weak domestic demand was pushing prices down, however inflation is expected to drop below the bank's medium term target of an annual 3% in 2011.

South African house prices rise +2.4%

South African house prices increased by +2.4% in March compared to February 2010 as they showed growth of +8.6% year-on-year, according to the FNB House Price Index.

House prices had started to increase in August 2009 and have risen by +10.6% since then. They had previously declined by -20% between March 2008 and July 2009.

John Loos, FNB’s home loans strategist said: “From the bottom point of the 2008/9 price slump in June 2009, the cumulative nominal increase in the FNB House Price Index as at March amounts to +11.8%. Since the start of the index numbers back in July 2000, almost ten years ago, the cumulative increase to date is 197.9%.”

The average house price in the index was estimated at R779,546 (US$106,378).

Visas for foreign buyers of property in Dubai need to be longer as they are hampering the country’s property market, according to CB Richard Ellis (CBRE).

Currently only six-month visas are issued to foreign homeowners and investors would favour more relaxed residency rules.

Nicholas Maclean, managing director of CBRE Middle East, said: “Shortness of residency is definitely keeping the buyers away. We do need to elongate the window that people have so they don’t need to go back and forth. The period we have at the moment is a barrier to entry.

“By tweaking the visa regulations the Government can control who buys here. And that might be a good thing, so they can keep people here who could be a long-term benefit to, rather than beneficiary of, the economy here. We should be encouraging people who want to come, bring their families, educate their children, spend into the retail markets and have a house.”

Dubai’s property prices have fallen by -50% since their peak in 2008, but the global downturn has wiped around $100bn off the value of the emirate’s developed property assets and, according to Colliers International, one in four homes now stand empty. Deutsche Bank predicts there will be an oversupply of 32,000 new homes by the end of 2010.

Charles Neil, CEO of Landmark Properties, said: “The one thing that would give a real boost to the property market would be if the federal Government would allow three-year visas. It would transform the market. This is the one thing that is keeping investors away at the moment.”

The number of properties sold at auctions across Australia has increased to 73% in March 2010, up +11% on the same month in 2009, according to RP Data.

There was also an increase in the volume of properties at auction as they rose from 4,532 in March 2009 to 6,964 in March 2010 with a record number of 2,845 in the week ending 26 th March. In the same week last year, the clearance rate was 62% and there were only 1,571 auction properties.

Tim Lawless, RP Data’s research director said: "When you see rates above 70%, it consistently shows strong sentiment in the market. When an auction clearance rate is high, it means buyers are prepared to pay vendors a reasonable price."

Melbourne had the strongest auction clearances, with over 80% of properties sold that have gone under the hammer.