If you are considering buying investment property in the UK – be warned. The latest headlines from all the major newspapers and the BBC etc, are making a great deal of the fact that average house prices in the UK rose in July by 1.7%
More on House prices rise in the UK – Much ado about nothing
London townhouse sold for huge discount; the UK, Hong Kong, Dubai and Calgary markets have bottomed out; Luxury resort in the Bahamas goes broke; Irish property prices have fallen 52 percent and a British Member of Parliament forgets he paid his mortgage off.
Volatility still rules the property markets – although when the term “volatility,” started to mean “dropping prices,” remains a mystery. A few interesting reports from the property investing world make disturbing reading for some markets – particularly some of the emerging markets.
Prices for investment properties in Bulgaria continue falling, with no end in sight at the moment. Particularly hard hit are the summer resorts of Sveti Vlas and Slunchev Briag (Sunny Beach), the largest summer resort on the Bulgarian Black Sea. In those luxury resorts, prices have fallen to such an extent that currently there are brand new three-bedroom “luxury” flats on offer for 70 000 euros. A similar fate has befallen the Alpine ski resort of Bansko, where new, completed modern apartments in ‘key locations’ are being offered for 70 000 euros.
Numis Securities, a City investment bank, expects amateur buy-to-let landlords to begin “panic selling,” their investment properties as house values continue to decline in the UK, causing the average home value to fall below £100,000. Their recent report stated:
More on British Property Prices could fall another 55 percent
An economics professor at the University of Chicago, Casey Mulligan, has just predicted that it is unlikley there will be a commercial property crisis, based on the fact that there was very little over-building in commercial real estate during the boom years.
The Abu Dhabi Real Estate and Investment Show has been hit hard by the global downturn. Exhibitors showcasing their latest projects said yesterday that they are finding buyers hard to come by. The sales staff just about outnumbered the visitors at the Abu Dhabi National Exhibition Center on the opening day.
However one chooses to look at the current financial situation, there are winners and losers. The current losers, to our minds, are developers with excess stock to move in a slow market. The winners are well-funded buyers in a good bargaining position. Prices are being reduced on property around the world, and any developer worth his salt knows that it is far better to take a drop in price and move the stock rather than sit on it until the market picks up.
More on Buyers in stronger position to bargain over property prices
Europe may have lagged behind the US during the recent credit crisis, but they have caught up now and the effects are starting to be felt in the property markets. For the first time in many years, estate agents are closing their doors and the windows of the remaining agents are littered with hastily dropped prices. Property price movements in France usually lag behind the UK movements and this downturn is no exception.
The latest Knight Frank Global Price Index reveals that growth in residential property markets around the world is slowing. On an un-weighted basis prices globally rose by 8.2% per annum to Q3 2007 compared to 9.6% 12 months earlier. Rising interest rates have been a major factor in slowing house price growth, together with the tightening of lending criteria seen in many European countries.
