Source : The Business Times, February 3, 2009
Sterling's fall offers them huge savings; but local sales dry up, with prices in UK down by up to 30%
POCKETS of London property are becoming increasingly attractive to foreign buyers as sterling plummets. But the outlook for the country as a whole remains bleak as transactions grind to a halt.
Areas such as Kensington, Belgravia, Knightsbridge and Chelsea are seeing strong demand from foreigners who stand to reap huge savings because of recent currency movements.
Estate agents are rapidly slapping 'sold to overseas buyer' on property advertisements in London shop windows - the only evidence of real activity the market has seen in months.
Prices across the country are down by as much as 30 per cent from a year earlier, with domestic sales all but drying up as would-be buyers fail to obtain credit.
But the outlook for overseas buyers is rosy. With sterling having lost 35 per cent of its value against the euro and 30 per cent against the US dollar in the past year, bargains are to be had by foreigners with cash to spare.
Research by Savills shows properties now cost 50 per cent less for Japanese investors and 40 per cent less for buyers from Hong Kong, Singapore or Taiwan, as well as Eurozone investors.
'With global bargains like these, the start of the recovery may well be driven by equity-rich investment from the Far East or Europe,' according to Yolande Barnes, head of residential research at Savills.
Research by Hamptons International revealed a 20 per cent rise in the number of Europeans buying prime London sites in 2008. And Hamptons expects London property to remain attractive to overseas buyers throughout 2009.
'This (currency movements) makes the UK property market far more attractive to overseas buyers, and the net impact combined with price falls for this sector, equates to more than a 50 per cent drop in the cost of buying a UK property,' the estate agent said.
Likewise, overseas buyers are increasingly finding the office market attractive. Demand for office space in London declined 27 per cent in the third quarter of 2008, according to Jones Lang Lasalle.
'However, London office property is becoming increasingly attractive to overseas investors as sterling's record low is making UK assets look cheap,' said Damian Corbett, head of West End investment for the estate agent.
The market for residential property in London as a whole, however, remains uncertain as buyers struggle to secure mortgages amid the credit crunch.
According to Knight Frank, prices of prime London properties continue to decline, with figures in January showing the second-biggest fall on record. Prices eased 3.7 per cent from a month earlier.
In the past year, prices have dropped 21 per cent, according to the estate agent.
Compounding the problem has been the spate of job cuts in the City over the past few months, as the finance industry feels the brunt of the economic downturn.
This means that many wealthy British buyers are withdrawing from the property market as bonuses are slashed or jobs disappear.
Across the country, repossessions are becoming more apparent as home owners fail to meet mortgage payments.
According to the Financial Services Authority, repossessions increased 92 per cent in the third quarter of 2008.
Tuesday, February 3, 2009
Another Blow To UK Luxury Home Prices
Source : The Business Times, February 3, 2009
(EDINBURGH) London luxury home prices had the second-biggest decline on record in January as would-be buyers struggled to secure mortgages from banks hurt by the global financial crisis.
A little less dear: The cost of buying a luxury home in London has fallen for 10 months, declining 21% since the market's peak in March
The average value of homes costing more than £1 million (S$2.1 million) in London's most expensive neighbourhoods fell 3.7 per cent from a month earlier, Knight Frank LLP said in a statement on Jan 31. In the past 12 months, prices have slumped 21 per cent, the biggest annualised drop recorded by Knight Frank.
'The sudden restriction of mortgage finance' was the main cause of the market's decline last year, Liam Bailey, head of residential research at London-based Knight Frank, said in the statement. 'This factor is continuing to cause problems for the housing market and the wider economy.'
The cost of buying a luxury home in the UK capital has fallen for 10 straight months, declining 21 per cent since the market's peak in March. The biggest drop since the broker started the survey in 1976 was 3.9 per cent, recorded in October.
Financial services companies in London may cut as many as 60,000 jobs by the end of 2010, according to research firm Oxford Economics. As a result, the market won't rebound soon, Knight Frank said.
'Price falls should begin to level out towards the end of 2009, although 2010 is likely to see prices move sideways at best,' said Mr Bailey. Knight Frank now expects prices to fall as much as 35 per cent from their peak, compared with its previous estimate of 30 per cent.
The drop in prices has attracted more potential buyers. The fall in the pound against the US dollar and the euro is prompting international buyers to look at London properties. Viewing levels last month were 65 per cent higher than a year earlier, while the number of international buyers registering with a broker in January was 35 per cent more than the year before.
The neighbourhoods attracting the biggest increase in interest last month were Mayfair, Knightsbridge, Belgravia and Chelsea, said Knight Frank.
'If the weakness of sterling continues, it will help to bolster demand from the foreign super-rich, partially compensating for the reduced earning ability of many City-based buyers,' said Mr Bailey.
The pound has fallen 28 per cent against the US dollar in the past year and 14 per cent against the euro in the past year.
House prices across the UK fell 1.3 per cent in January from the previous month and about 17 per cent on an annual basis, Nationwide Building Society, the UK's largest customer- owned mortgage lender, said on Jan 29. The report covered all types of homes.
While the biggest drop in values has been in properties costing as much as £2.5 million, homes costing more than £10 million have lost 20 per cent in value since September.
In November, Richard Cutt, head of Knight Frank's Mayfair agency, sold a modernised 7,321 square foot house near Grosvenor Square to a Middle East buyer for £15 million, 25 per cent less than the original asking price.
A property costing £100,000 in 1976 when Knight Frank started its index, peaked in value at £3.99 million in March. By the end of last month, it was worth £3.13 million, the equivalent of losing about £2,810 in value every day over the intervening 10 months.
London-based Knight Frank compiles its monthly index from estimated values of properties in the Mayfair, St John's Wood, Regent's Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and the South Bank neighbourhoods of London. -- Bloomberg
(EDINBURGH) London luxury home prices had the second-biggest decline on record in January as would-be buyers struggled to secure mortgages from banks hurt by the global financial crisis.
A little less dear: The cost of buying a luxury home in London has fallen for 10 months, declining 21% since the market's peak in MarchThe average value of homes costing more than £1 million (S$2.1 million) in London's most expensive neighbourhoods fell 3.7 per cent from a month earlier, Knight Frank LLP said in a statement on Jan 31. In the past 12 months, prices have slumped 21 per cent, the biggest annualised drop recorded by Knight Frank.
'The sudden restriction of mortgage finance' was the main cause of the market's decline last year, Liam Bailey, head of residential research at London-based Knight Frank, said in the statement. 'This factor is continuing to cause problems for the housing market and the wider economy.'
The cost of buying a luxury home in the UK capital has fallen for 10 straight months, declining 21 per cent since the market's peak in March. The biggest drop since the broker started the survey in 1976 was 3.9 per cent, recorded in October.
Financial services companies in London may cut as many as 60,000 jobs by the end of 2010, according to research firm Oxford Economics. As a result, the market won't rebound soon, Knight Frank said.
'Price falls should begin to level out towards the end of 2009, although 2010 is likely to see prices move sideways at best,' said Mr Bailey. Knight Frank now expects prices to fall as much as 35 per cent from their peak, compared with its previous estimate of 30 per cent.
The drop in prices has attracted more potential buyers. The fall in the pound against the US dollar and the euro is prompting international buyers to look at London properties. Viewing levels last month were 65 per cent higher than a year earlier, while the number of international buyers registering with a broker in January was 35 per cent more than the year before.
The neighbourhoods attracting the biggest increase in interest last month were Mayfair, Knightsbridge, Belgravia and Chelsea, said Knight Frank.
'If the weakness of sterling continues, it will help to bolster demand from the foreign super-rich, partially compensating for the reduced earning ability of many City-based buyers,' said Mr Bailey.
The pound has fallen 28 per cent against the US dollar in the past year and 14 per cent against the euro in the past year.
House prices across the UK fell 1.3 per cent in January from the previous month and about 17 per cent on an annual basis, Nationwide Building Society, the UK's largest customer- owned mortgage lender, said on Jan 29. The report covered all types of homes.
While the biggest drop in values has been in properties costing as much as £2.5 million, homes costing more than £10 million have lost 20 per cent in value since September.
In November, Richard Cutt, head of Knight Frank's Mayfair agency, sold a modernised 7,321 square foot house near Grosvenor Square to a Middle East buyer for £15 million, 25 per cent less than the original asking price.
A property costing £100,000 in 1976 when Knight Frank started its index, peaked in value at £3.99 million in March. By the end of last month, it was worth £3.13 million, the equivalent of losing about £2,810 in value every day over the intervening 10 months.
London-based Knight Frank compiles its monthly index from estimated values of properties in the Mayfair, St John's Wood, Regent's Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and the South Bank neighbourhoods of London. -- Bloomberg
Defuse This Time Bomb
Source : The Business Times, February 3, 2009
Lethal loan resets will worsen US housing market crisis
WHEN talking about the US home market, mentioning 'the other shoe to drop' was quaint about a year ago. Now we are referring only to bombs. The latest ordnance is the option adjustable-rate mortgage (ARM), one of the many sucker loans marketed during the housing boom. Option ARMs basically gave borrowers four ways to pay back, most of them involving low initial outlays that would reset at much higher monthly amounts at a future date.
Of the US$200 billion of these loans outstanding, almost US$30 billion is due to reset this year and US$67 billion in 2010, according to Fitch Ratings, a New York-based ratings company.
The resets inflict more trauma on the US housing market. The average option ARM monthly payment will soar 63 per cent - or US$1,052. Although there was a slight increase in home sales in November, prices fell 18 per cent from a year earlier, according to the S&P/Case-Shiller Index.
The pain continues. Since most option ARM borrowers will be unable to refinance because of lowered credit ratings or lack of home equity, many of those resets will result in more foreclosures and further depress home prices. Ultimately, the option ARM resets might plunge 8 million more households into foreclosure. That's in addition to the 2.3 million facing home loss last year, says Eric Rothmann, an analyst for Zacks Investment Research in Chicago.
Saw it coming
Like much of the housing train wreck, regulators saw the option ARM carnage coming.
Towards the peak of the housing boom, these loose lending vehicles became ever more popular as home prices soared. Accounting for only 12 per cent of total mortgage volume in 2004, option ARMs represented four out of 10 new loans three years later, according to LoanPerformance.com, a real-estate data service with headquarters in San Francisco.
Consistent with the worst of the bubble-inflated loan practices, these ARMs required little income documentation. You even had the option of starting out with a low monthly payment that morphed into a negative amortisation loan. That means you could owe more principal than you originally borrowed, even though the home value dropped.
What happened to the top issuers of these loans? Again, little surprise. Washington Mutual Inc, which filed for bankruptcy last September, no longer exists and Countrywide Financial Corp was bought by Bank of America Corp last year. Countrywide's toxic mortgages continue to bedevil Bank of America, which is still choking on its acquisition.
The shock-and-awe days of the housing crisis are far from over because of these loans and their cousins: sub-prime, 'Alt-A' and some prime mortgages. While President Barack Obama's administration struggles to fix the banking industry, it will be difficult to directly remove these loans - and related securities - from balance sheets without triggering billions in writedowns.
The option ARM barrage will exacerbate the housing decline in the worst-hit areas.
Homes that can't be refinanced probably won't be sold immediately. Assuming no government aid comes along to help these homeowners, the houses will go into foreclosure and be resold at much lower prices. That fuels what economists call a 'feedback loop' of ever-lower values.
Houses that are resold are discounted at least 30 per cent from the original selling prices, according to US researchers John Campbell, Stefano Giglio and Parag Pathak, who studied 1.8 million transactions in Massachusetts over the past 20 years.
Once foreclosures begin to ravage an area, the social consequences take their toll. Forced sales are bad news for everyone, except the lawyers and brokers involved.
Schools and other public services receive less from property taxes because of lower assessed valuations. People become homeless. Neighbours in proximity to a foreclosure also take a hit on their property value.
'We find that foreclosures predict lower prices for houses located within a quarter of a mile, and particularly within a 10th of a mile,' the researchers said.
It is difficult to summon sympathy for those borrowers who really shouldn't have obtained these loans in the first place or didn't think through the worst-case scenario. And the brokers, lenders and Wall Street mavens who sold and repackaged these loans deserve nothing but contempt.
Yet these mortgages are an unavoidable disease that needs to be treated. Either the government finds some way to allow qualified ARM borrowers to refinance at today's low rates, or it modifies the loans.
Recent proposals by the Federal Reserve and Federal Deposit Insurance Corp to start loan modifications for those in foreclosure are a step in the right direction. Allowing homeowners to rent their homes is another option.
Convert to loans
Perhaps Fannie Mae or Freddie Mac could buy a stake in the lower-cost, newly modified loans - similar to a call option - that would give taxpayers a piece of the upside in home equity appreciation. When the market turns around, they could be resold.
Why not convert the ARMs into 30-year, fixed-rate loans? 'This mortgage could be a viable option to give everyone some breathing room to stem the current onslaught and create the right resolutions,' Zacks' Mr Rothmann said.
If you are facing a reset, talk to your lender now. Ask some questions: Does your credit rating merit a refinancing? If it's hurting, what can you do to improve it? Do you have enough equity (at least 20 per cent is desirable) to get better terms? You have some negotiating room. The lender, mortgage-security holders and you all lose in a foreclosure.
The worst solution is to throw more unaccounted-for cash at the banks, hoping they will fix the situation. They won't.
No matter which approach is adopted, the foreclosure fusillade needs to stop. Otherwise home equity, mortgages and security writedowns will keep the financial system under siege. -- Bloomberg
Lethal loan resets will worsen US housing market crisis
WHEN talking about the US home market, mentioning 'the other shoe to drop' was quaint about a year ago. Now we are referring only to bombs. The latest ordnance is the option adjustable-rate mortgage (ARM), one of the many sucker loans marketed during the housing boom. Option ARMs basically gave borrowers four ways to pay back, most of them involving low initial outlays that would reset at much higher monthly amounts at a future date.
Of the US$200 billion of these loans outstanding, almost US$30 billion is due to reset this year and US$67 billion in 2010, according to Fitch Ratings, a New York-based ratings company.
The resets inflict more trauma on the US housing market. The average option ARM monthly payment will soar 63 per cent - or US$1,052. Although there was a slight increase in home sales in November, prices fell 18 per cent from a year earlier, according to the S&P/Case-Shiller Index.
The pain continues. Since most option ARM borrowers will be unable to refinance because of lowered credit ratings or lack of home equity, many of those resets will result in more foreclosures and further depress home prices. Ultimately, the option ARM resets might plunge 8 million more households into foreclosure. That's in addition to the 2.3 million facing home loss last year, says Eric Rothmann, an analyst for Zacks Investment Research in Chicago.
Saw it coming
Like much of the housing train wreck, regulators saw the option ARM carnage coming.
Towards the peak of the housing boom, these loose lending vehicles became ever more popular as home prices soared. Accounting for only 12 per cent of total mortgage volume in 2004, option ARMs represented four out of 10 new loans three years later, according to LoanPerformance.com, a real-estate data service with headquarters in San Francisco.
Consistent with the worst of the bubble-inflated loan practices, these ARMs required little income documentation. You even had the option of starting out with a low monthly payment that morphed into a negative amortisation loan. That means you could owe more principal than you originally borrowed, even though the home value dropped.
What happened to the top issuers of these loans? Again, little surprise. Washington Mutual Inc, which filed for bankruptcy last September, no longer exists and Countrywide Financial Corp was bought by Bank of America Corp last year. Countrywide's toxic mortgages continue to bedevil Bank of America, which is still choking on its acquisition.
The shock-and-awe days of the housing crisis are far from over because of these loans and their cousins: sub-prime, 'Alt-A' and some prime mortgages. While President Barack Obama's administration struggles to fix the banking industry, it will be difficult to directly remove these loans - and related securities - from balance sheets without triggering billions in writedowns.
The option ARM barrage will exacerbate the housing decline in the worst-hit areas.
Homes that can't be refinanced probably won't be sold immediately. Assuming no government aid comes along to help these homeowners, the houses will go into foreclosure and be resold at much lower prices. That fuels what economists call a 'feedback loop' of ever-lower values.
Houses that are resold are discounted at least 30 per cent from the original selling prices, according to US researchers John Campbell, Stefano Giglio and Parag Pathak, who studied 1.8 million transactions in Massachusetts over the past 20 years.
Once foreclosures begin to ravage an area, the social consequences take their toll. Forced sales are bad news for everyone, except the lawyers and brokers involved.
Schools and other public services receive less from property taxes because of lower assessed valuations. People become homeless. Neighbours in proximity to a foreclosure also take a hit on their property value.
'We find that foreclosures predict lower prices for houses located within a quarter of a mile, and particularly within a 10th of a mile,' the researchers said.
It is difficult to summon sympathy for those borrowers who really shouldn't have obtained these loans in the first place or didn't think through the worst-case scenario. And the brokers, lenders and Wall Street mavens who sold and repackaged these loans deserve nothing but contempt.
Yet these mortgages are an unavoidable disease that needs to be treated. Either the government finds some way to allow qualified ARM borrowers to refinance at today's low rates, or it modifies the loans.
Recent proposals by the Federal Reserve and Federal Deposit Insurance Corp to start loan modifications for those in foreclosure are a step in the right direction. Allowing homeowners to rent their homes is another option.
Convert to loans
Perhaps Fannie Mae or Freddie Mac could buy a stake in the lower-cost, newly modified loans - similar to a call option - that would give taxpayers a piece of the upside in home equity appreciation. When the market turns around, they could be resold.
Why not convert the ARMs into 30-year, fixed-rate loans? 'This mortgage could be a viable option to give everyone some breathing room to stem the current onslaught and create the right resolutions,' Zacks' Mr Rothmann said.
If you are facing a reset, talk to your lender now. Ask some questions: Does your credit rating merit a refinancing? If it's hurting, what can you do to improve it? Do you have enough equity (at least 20 per cent is desirable) to get better terms? You have some negotiating room. The lender, mortgage-security holders and you all lose in a foreclosure.
The worst solution is to throw more unaccounted-for cash at the banks, hoping they will fix the situation. They won't.
No matter which approach is adopted, the foreclosure fusillade needs to stop. Otherwise home equity, mortgages and security writedowns will keep the financial system under siege. -- Bloomberg
New Home Completions Could Come In Below URA Estimates
Source : The Business Times, February 3, 2009
DTZ's estimates for 2009 to 2013 trail those of URA by about by 21%
The number of new private homes completed in the next five years could come in 21 per cent lower than official estimates, a new report by DTZ says.
Based on estimates released by the Urban Redevelopment Authority (URA) at end-2008, an average of 11,626 private housing units a year were scheduled for completion from 2009 to 2013.
This is 34 per cent higher than the annual average of 8,671 units in the past 10 years (1999 to 2008).
However, DTZ puts annual average completions between 2009 and 2013 at just 9,143 units a year - some 21 per cent under URA's estimates.
This year, about 10,000 units will still be completed because they are already under construction, DTZ said. This will exert downward pressure on rents and prices.
'Since Q4 2007, the number of private residential units in the pipeline has decreased every quarter, and more completion dates have been pushed back to 2012 and beyond in view of the weak property market outlook,' DTZ says in its report.
And in Q4 2008, there were even more delays, as an increasing amount of the projected supply was pushed to 2013 or later with the rapid deterioration of the economy.
DTZ also pointed out that during the 1997-98 Asian financial crisis, projected completion supply at end-1997 for the four-year period from 1998 to 2001 was 42 per cent higher than actual completions. The over-projection was especially higher for the later three years (1999 to 2001), in the range of 50-75 per cent per year.
Similarly, during the 2001 economic slowdown following the crash of Internet stocks, projected completion supply at end-2001 was over-estimated by 7-21 per cent a year from 2002 to 2005, or about 13 per cent for the four-year period.
DTZ also said that based on the 10-year average annual take-up of 8,014 units, it will take five and a half years to clear the inventory of 44,661 unsold private residential units with and without pre-requisites at end-2008.
This figure has come down 9 per cent from the peak of 49,157 units in Q1 2008, but increased 1.6 per cent from Q3 2008 as take-up dipped to a record low in Q4 2008.
'We expect take-up to remain low this year, between 5,000 to 6,000 units, with more sales likely to take place in the second half of the year as price expectations between buyers and sellers close,' said DTZ's senior research director Chua Chor Hoon.
DTZ's estimates for 2009 to 2013 trail those of URA by about by 21%
The number of new private homes completed in the next five years could come in 21 per cent lower than official estimates, a new report by DTZ says.
Based on estimates released by the Urban Redevelopment Authority (URA) at end-2008, an average of 11,626 private housing units a year were scheduled for completion from 2009 to 2013.
This is 34 per cent higher than the annual average of 8,671 units in the past 10 years (1999 to 2008).However, DTZ puts annual average completions between 2009 and 2013 at just 9,143 units a year - some 21 per cent under URA's estimates.
This year, about 10,000 units will still be completed because they are already under construction, DTZ said. This will exert downward pressure on rents and prices.
'Since Q4 2007, the number of private residential units in the pipeline has decreased every quarter, and more completion dates have been pushed back to 2012 and beyond in view of the weak property market outlook,' DTZ says in its report.
And in Q4 2008, there were even more delays, as an increasing amount of the projected supply was pushed to 2013 or later with the rapid deterioration of the economy.
DTZ also pointed out that during the 1997-98 Asian financial crisis, projected completion supply at end-1997 for the four-year period from 1998 to 2001 was 42 per cent higher than actual completions. The over-projection was especially higher for the later three years (1999 to 2001), in the range of 50-75 per cent per year.
Similarly, during the 2001 economic slowdown following the crash of Internet stocks, projected completion supply at end-2001 was over-estimated by 7-21 per cent a year from 2002 to 2005, or about 13 per cent for the four-year period.
DTZ also said that based on the 10-year average annual take-up of 8,014 units, it will take five and a half years to clear the inventory of 44,661 unsold private residential units with and without pre-requisites at end-2008.
This figure has come down 9 per cent from the peak of 49,157 units in Q1 2008, but increased 1.6 per cent from Q3 2008 as take-up dipped to a record low in Q4 2008.
'We expect take-up to remain low this year, between 5,000 to 6,000 units, with more sales likely to take place in the second half of the year as price expectations between buyers and sellers close,' said DTZ's senior research director Chua Chor Hoon.
Negative Equity Mortgages Soar In Hong Kong
Source : The Business Times, February 3, 2009
30% y-o-y drop in property prices expected by summer
(HONG KONG) The number of Hong Kong mortgages in negative equity quadrupled in the final months of last year as property prices tumbled, authorities said yesterday.
The estimated number of residential mortgages in negative equity - where the market value of the house is below the value of the bank loan taken out to buy it - jumped to 10,949 cases over the three months to December, from 2,568 cases in the third quarter, the Hong Kong Monetary Authority said.
The percentage of mortgage borrowers in negative equity increased from 0.5 per cent to 2.3 per cent, the figures showed.
The value of the problem loans rose to HK$24.8 billion (S$4.8 billion), up from HK$6 billion dollars in the third quarter.
The unsecured portion of the loans also increased to HK$2.7 billion from HK$400 million.
Demands for residential and commercial properties have fallen substantially on the back of job cuts. Hong Kong slipped into recession in the third quarter, according to government figures.
The number of negative equity cases remains far from Hong Kong's historic high of 106,000 in the second quarter of 2003.
At that time, the property market was still trying to recover ground after the 1997 Asian financial crisis, when Hong Kong was further hit by the outbreak of severe acute respiratory syndrome (Sars).
Hong Kong's property market has boomed since then with more and more luxury flats and houses rising up in the city's densely populated residential areas, sparking a flurry of speculation.
But the financial crisis has hit the city's top earners hard, with a knock-on effect to the city's luxury market.
Thousands of property agents have lost their jobs and some analysts are expecting a year-on-year drop in property prices of up to 30 per cent by next summer. -- AFP
30% y-o-y drop in property prices expected by summer
(HONG KONG) The number of Hong Kong mortgages in negative equity quadrupled in the final months of last year as property prices tumbled, authorities said yesterday.
The estimated number of residential mortgages in negative equity - where the market value of the house is below the value of the bank loan taken out to buy it - jumped to 10,949 cases over the three months to December, from 2,568 cases in the third quarter, the Hong Kong Monetary Authority said.
The percentage of mortgage borrowers in negative equity increased from 0.5 per cent to 2.3 per cent, the figures showed.
The value of the problem loans rose to HK$24.8 billion (S$4.8 billion), up from HK$6 billion dollars in the third quarter.
The unsecured portion of the loans also increased to HK$2.7 billion from HK$400 million.
Demands for residential and commercial properties have fallen substantially on the back of job cuts. Hong Kong slipped into recession in the third quarter, according to government figures.
The number of negative equity cases remains far from Hong Kong's historic high of 106,000 in the second quarter of 2003.
At that time, the property market was still trying to recover ground after the 1997 Asian financial crisis, when Hong Kong was further hit by the outbreak of severe acute respiratory syndrome (Sars).
Hong Kong's property market has boomed since then with more and more luxury flats and houses rising up in the city's densely populated residential areas, sparking a flurry of speculation.
But the financial crisis has hit the city's top earners hard, with a knock-on effect to the city's luxury market.
Thousands of property agents have lost their jobs and some analysts are expecting a year-on-year drop in property prices of up to 30 per cent by next summer. -- AFP
Aussie Home Prices Down 3.3% In 2008: Analysts
Source : The Business Times, February 3, 2009
Biggest annual drop so far points to further rate cuts
(SYDNEY) Australian house prices fell 3.3 percent in 2008, official figures showed yesterday, reflecting their biggest annual drop and cementing expectations of more interest rate cuts, analysts said.
Property prices fell 0.8 per cent in the December quarter, according to the Australian Bureau of Statistics, the largest 12-month fall since the data service began 23 years ago.
But economists said the price drop is unlikely to spiral out of control and match the crippling 10 to 20 per cent falls in the US and Britain, Dow Jones Newswires reported.
'We maintain this is not the beginning of the end (for house prices),' said Katie Dean, senior economist at ANZ Bank.
'Ongoing commentary that suggests that softer prices in Australia will end up as a US-style collapse remains unfounded.'
A growing population boosted by immigration, and a shortage of housing, are expected to stave off a major loss in value in a country where property is regularly cited as among the least affordable in the world.
But the latest figures support the case for the central bank to cut interest rates again.
The Reserve Bank of Australia is widely expected to slash rates by up to 100 basis points after its monthly board meeting on Tuesday, taking rates to a 45-year low.
The figures came as Prime Minister Kevin Rudd said the global economic crisis and China's slowdown will punch a A$115 billion (S$109.6 billion) hole in Australia's budget over the next four years.
Mr Rudd flagged more government spending in a new stimulus package to be revealed soon, pledging 'to move heaven and earth' to support growth in the economy. -- AFP
Biggest annual drop so far points to further rate cuts
(SYDNEY) Australian house prices fell 3.3 percent in 2008, official figures showed yesterday, reflecting their biggest annual drop and cementing expectations of more interest rate cuts, analysts said.
Property prices fell 0.8 per cent in the December quarter, according to the Australian Bureau of Statistics, the largest 12-month fall since the data service began 23 years ago.
But economists said the price drop is unlikely to spiral out of control and match the crippling 10 to 20 per cent falls in the US and Britain, Dow Jones Newswires reported.
'We maintain this is not the beginning of the end (for house prices),' said Katie Dean, senior economist at ANZ Bank.
'Ongoing commentary that suggests that softer prices in Australia will end up as a US-style collapse remains unfounded.'
A growing population boosted by immigration, and a shortage of housing, are expected to stave off a major loss in value in a country where property is regularly cited as among the least affordable in the world.
But the latest figures support the case for the central bank to cut interest rates again.
The Reserve Bank of Australia is widely expected to slash rates by up to 100 basis points after its monthly board meeting on Tuesday, taking rates to a 45-year low.
The figures came as Prime Minister Kevin Rudd said the global economic crisis and China's slowdown will punch a A$115 billion (S$109.6 billion) hole in Australia's budget over the next four years.
Mr Rudd flagged more government spending in a new stimulus package to be revealed soon, pledging 'to move heaven and earth' to support growth in the economy. -- AFP
Hong Kong Counts Toll On Rents, Prices
Source : The Business Times, February 3, 2009
(HONG KONG) Home prices and rents in Hong Kong fell in 2008 as the city's economy and equity markets suffered from the global financial crisis, Centaline Property Agency Ltd said.
Advertising to attract: Rents fell by a smaller degree than prices because of a lack of new housing units, helping rental yields rise 27 basis points to 4.63%
Prices for non-government-built residential units fell 16.3 per cent last year, according to an index of 73 apartment buildings that was developed by Centaline, one of Hong Kong's biggest real estate agencies. Rents dropped 9.7 per cent to HK$13.90 (S$2.71) a square foot in 2008 from the previous year, Centaline said in a report on its website.
Rents fell by a smaller degree than prices because of a lack of new housing units, helping rental yields rise 27 basis points to 4.63 per cent, Wong Leung-sing, an associate director at Centaline, said in the report that was dated Sunday. One basis point is 0.01 percentage point.
'This is the highest since the 5.46 per cent posted in 2003, when the city was hit by the Sars epidemic,' Mr Wong said.
'Given the sizeable yield, there is likely to be more buying from long- term investors.'
Hong Kong's economy slid into a recession last year for the first time since the severe acute respiratory syndrome stalled growth.
Hong Kong developers likely finished building 8,776 units in 2008, the lowest since 1972, Centaline said in a report in January. Share prices of Hong Kong property developers dropped yesterday, with the Hang Seng Property Index that tracks six such companies losing 3.7 per cent as of 11.44 am local time, making it the biggest decliner on the local benchmark.
Cheung Kong (Holdings) Ltd, Hong Kong's second-biggest property developer by value, traded 3.8 per cent lower at HK$68.90. Sino Land Co, the second-biggest seller of new private homes last year, dropped 4 per cent to HK$7.30, the lowest in a week.
Following the launch of new properties this year, coinciding with the traditionally more robust season in the post Lunar New Year holiday, the decline in rents may gradually slow and stabilise with housing prices, Mr Wong said.
The Hong Kong stock market was closed from Jan 26 to Jan 28 for the holiday. -- Bloomberg
(HONG KONG) Home prices and rents in Hong Kong fell in 2008 as the city's economy and equity markets suffered from the global financial crisis, Centaline Property Agency Ltd said.
Advertising to attract: Rents fell by a smaller degree than prices because of a lack of new housing units, helping rental yields rise 27 basis points to 4.63%Prices for non-government-built residential units fell 16.3 per cent last year, according to an index of 73 apartment buildings that was developed by Centaline, one of Hong Kong's biggest real estate agencies. Rents dropped 9.7 per cent to HK$13.90 (S$2.71) a square foot in 2008 from the previous year, Centaline said in a report on its website.
Rents fell by a smaller degree than prices because of a lack of new housing units, helping rental yields rise 27 basis points to 4.63 per cent, Wong Leung-sing, an associate director at Centaline, said in the report that was dated Sunday. One basis point is 0.01 percentage point.
'This is the highest since the 5.46 per cent posted in 2003, when the city was hit by the Sars epidemic,' Mr Wong said.
'Given the sizeable yield, there is likely to be more buying from long- term investors.'
Hong Kong's economy slid into a recession last year for the first time since the severe acute respiratory syndrome stalled growth.
Hong Kong developers likely finished building 8,776 units in 2008, the lowest since 1972, Centaline said in a report in January. Share prices of Hong Kong property developers dropped yesterday, with the Hang Seng Property Index that tracks six such companies losing 3.7 per cent as of 11.44 am local time, making it the biggest decliner on the local benchmark.
Cheung Kong (Holdings) Ltd, Hong Kong's second-biggest property developer by value, traded 3.8 per cent lower at HK$68.90. Sino Land Co, the second-biggest seller of new private homes last year, dropped 4 per cent to HK$7.30, the lowest in a week.
Following the launch of new properties this year, coinciding with the traditionally more robust season in the post Lunar New Year holiday, the decline in rents may gradually slow and stabilise with housing prices, Mr Wong said.
The Hong Kong stock market was closed from Jan 26 to Jan 28 for the holiday. -- Bloomberg
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