Has A Global Housing Slowdown Begun? [Housing Tracker]

Global Home Prices

Booming Indian Property Mkt Beckons UK Investors.  “Buoyed by a vibrant real estate market, investors in Britain are increasingly preferring India for investment seeking higher returns on the back of a slowdown in Britain's realty market… In the last two years alone, property prices in India increased by 70%. India is also seen as an attractive destination due to the Indian government recently relaxing rules for foreign investment in the housing sector. Merrill Lynch consultants have predicted a 700% increase in the Indian property market by 2015.”  (Business Standard, June 23^rd) 

FACTBOX-Asian Property Markets Holding Up Despite Credit Woes.  “Since 2005, foreign investors have earmarked an estimated $20 billion for property in India… quadrupling land prices in many areas. Government figures show only about $2B has actually been spent… China's steps to cool a frenzied residential market are finally biting and look likely to usher in an industry shake-out that could see thousands of small-time developers forced out of business, leaving large listed operators sitting pretty… The global credit crunch has [led to] forecasts that Hong Kong’s commercial property market will soon cool… Private home prices in Singapore surged 31% in 2007… Government measures, coupled with fears of a global downturn, scared off buyers and caused Q1’08 home sales to dip to the lowest level since… 2003. Price growth slowed to 3.7%.”  (Money, June 22^nd) 

Carlyle Sees Beyond The Pain In Spain.  “From a growth rate of 16.0% three years ago, the Ministry of Housing said house prices rose at just a 3.8% clip in Q1. Global Insight's Raj Badiani: That may be "overstating the strength" of the market. Website Idealista.com: Resale property asking prices declined by 2.0% in Barcelona and 0.3% in Madrid in 2007... In February, Fitch warned that Spain is probably in line for a "house-price adjustment…” The Carlyle Group opened a real estate office in Madrid in February and in early June closed its Third European Real Estate Fund with €9.0 billion ($14.0B) to invest across Europe, including in Spain.”  (Forbes, June 21^st) 

Thousands of Britons Will Lose Their Homes.  “Shelter, an [affordable housing] and homeless charity… predicts that 53,000 Britons will lose their home this year. A deepening financial crisis in the United Kingdom means that many are struggling to meet the monthly repayments on money borrowed to buy houses… [While] 6 million families are suffering stress or depression due to today's sky-high housing costs, [they] are spending less on food, selling possessions, borrowing from friends and family and depriving their children of treats. Two million say meeting housing costs is a constant struggle, with 400,000 falling behind with rent or mortgage payments.” (Ohmynews, June 21^st) 

Pound Falls as BOE’s Gieve Says House Prices Will Extend Slide.  “The pound fell against the euro after Bank of England Deputy Governor John Gieve said U.K. house prices will extend their slide, denting consumer confidence. The currency dropped from near the highest level in three weeks as investors reduced bets the central bank will raise interest rates to curb inflation… Gieve told business leaders yesterday property values “have further to fall” and the “shock to expectations appears to be having a wider impact on confidence.”  (Bloomberg, June 20^th) 

New Tax Cut Plea As House Prices Tumble.  “Ireland suffered the third biggest drop in house prices last year... Between the start of 2007 and the beginning of 2008, Irish house prices dropped an average of 13.2%. Only Latvia, with a huge slump of 38.2%, and the US, with an 18% drop, performed worse. In comparison, Slovakia recorded a 29% increase in real terms, followed by Shanghai  (28%) and Hong Kong (26%). However, most of the areas measured in the Global Property Guide survey also experienced a drop -- with only 13 countries seeing price rises compared with 21 where prices fell, when adjusted for inflation.” (Ireland Independent, June 20^th) 

Zut Alors! France, Sans KB Home, Catches The Housing Flu.  “KB Homes’ decision to jettison its European operations a year ago is looking pretty smart: Kaufman & Broad SA, the Paris-based builder sold by KB Home, on Thursday… reported a 71% drop in FH2’08 earnings and slashed its sales forecast for the year… Kaufman & Broad’s stock tumbled 17% in Paris to the equivalent of $43/share… Kaufman & Broad’s CEO, Guy Nafilyan: "[Home] orders in France will probably fall this year by 15%-20%.” In May 2007 KB agreed to sell its 49% stake in the European builder to buyout firm PAI Partners for €601 million, at the time worth $812M… using the sale proceeds to pare debt.”  (LA  Times, June 19^th) 

Japanese Property Market Slips Into Reverse.  Japan: “Yuji Hirota, head of international assessment at the Japan Real Estate Institute: "Until six months ago, land prices and rents were rising and vacancy rates were falling. But with the spreading impact of the subprime problem… everything is going the other way.” Real estate research company Miki Shoji: Vacancy rates in the Tokyo business district have inched up for four consecutive months, climbing to 3.29% in May compared with 2.65% last December… JREI survey: Capitalization rate for A-class office buildings in Otemachi, a business district in central Tokyo, has risen slightly, for the first time in five years, indicating that prices have fallen.”  (Financial Times, June 19^th) 

Hedge Fund Chief Pessimistic About UK Property.  “John Paulson, the US hedge fund manager who made a fortune for his investors by anticipating the debacle in subprime mortgages, said on Wednesday it was too early to look for bargains in the financial sector and predicted the worst was yet to come for the UK housing market… Mr. Paulson, [who] has $33bn in funds under management… said he was particularly worried about the UK housing market, which he believes was more overvalued at the peak than the US market. “For the last four months prices have been depreciating and the decline is accelerating,” he said.”  (Financial Times, June 18^th) 

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

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Comments

[darcydancer]

Cheap and easy credit was hardly unique to the US. Canada is showing similar toppiness, and the Australian market is defying gravity.

[Redfish Mark]

The virus is much more widespread than the myopic US media coverage would suggest. 21 nations experienced price declines, some much more impressive than here at home. Ouch.

[Dean Plassaras]

Easy money was a global liquidity phenomenon.

[WAKEUP]

It's the Recession. It's Here. It won't leave, anytime Soon. It is going to Hurt. A Lot. "Cycle" is just a word, as long as we're on the good end of it, but the Cycle becomes a sad and depressing reality, at the other end. It's Here. Try to get Used to It. It will be Here, for quite some Time.

[hownow]

Indian real estate booming?????

you need an update

indiaplay.blogspot.com...

[Judy Weil, SA Editor]

Dear 'Really'

I'd like to see the article, but the link brings me to a "page not found"
any suggestions?

Thanks,
Judy

[brij srivastava]

Your views are on track,but investment in indian realty should be done after seeing this present government out. Invest in india only when there is a government with clear majority.Thats my take on this subject.

[Alpha Smurf]

On India reality - the Developers (of property) are putting up a brave face at an astronomical rise in prices in the past 4 years. Their greed is unending....so much so they are refusing to acknowledge the sharp drop in sales this calender. Somebody has to relent....and the truth is the buyers won't.

I would say dont invest in India property till 2010. The market is still superhot on prices and there is a long way to go for both land, residential and commercial. Correction will be slow and time based since most developers are flush with funds....but incomes havent risen astronomically as realty prices.