Global Property Boom

[Uncle Festivus]

There appears to be some weakening of the global property boom recently, and the poor old Brits are taking a hammering.

Hundreds of British investors who pumped their money into Florida's soaring housing market have been caught out in its spectacular collapse.
Many bought apartments off-plan, hoping to sell them on at a huge profit as soon as they were built.
However, they have been left with property they can't sell - even for less than the original price - because of rising interest rates and a glut of condominiums for sale.
Florida house prices have been plunging for 18 months, but research shows investors in high-rise condos have been hurt the most.

http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=458067&in_page_id=1770

USA

Hank Paulson jumped the gun when he said earlier this week that the US housing slump has finally petered out, according to the chief executive of Toll Brothers.
Robert Toll’s criticism of the US Treasury Secretary came as Toll, the luxury homebuilder, said that net income plummetted 79 per cent in its second quarter.

Ireland & Spain

Home prices in Ireland and Spain surged in the past 10 years as borrowing costs plunged and construction helped fire economic growth. Now that's changing. House-price inflation in Spain dropped to 7.2 percent in March, a nine-year low. On April 24, the country's benchmark IBEX 35-stock index fell as much as 3.1 percent on concern that the property boom was imploding. The index has since lost another 1.7 percent.
In Ireland, the cost of a home has fallen for the first time in more than five years, slipping 0.6 percent in March from the month before, Dublin-based mortgage lender Irish Life & Permanent Plc said April 27.

This is a long way from the glory days of the property boom in both countries. Irish house prices climbed 335 percent from 1995 to 2005, the most among 18 countries surveyed by the Organization for Economic Cooperation and Development. Prices in Spain rose 169 percent during the same period, while in Germany, Europe's largest economy, the cost of homes stagnated.

 

[Uncle Festivus]

Re: Global Property Boom/Bust

Spain faces frightening parallels to Britain

By Ambrose Evans-Pritchard

Last Updated: 12:51am BST 19/09/2007


Spanish officials have furiously denied reports that the country’s property market is heading for a crash or that a clutch of banks may be in the same boat as Northern Rock.

Miguel Angel Ordoñez, the Bank of Spain’s governor, told the Spanish parliament yesterday that the country’s financial system was “immensely solid” despite the dramatic fall in the share price of mid-sized banks and construction firms geared to the deflating property bubble.

http://www.telegraph.co.uk/money/ma...07/09/19/cnspain119.xml&CMP=ILC-mostviewedbox

David Owen, an economist at Dresdner Kleinwort, said Spain was in danger of a serious crisis. “House prices may fall, but what is even worse is that the corporate sector’s deficit has grown so large that it needs to find financing equivalent to 10pc of GDP every quarter just to stand still,” he said.

 

[theasxgorilla]

I really wouldn't mind a nice villa on the Mediterrain coast somewhere... So they're becoming more affordable are they??

 

[Uncle Festivus]

More GPB (Global Property Bust)

The fresh interest in gold comes as the yen renews its slide, hit by signs that the economy may be tipping back into deflation after the housing collapse during the summer. Housing starts fell 23.4pc in July and 43.4pc in August as new laws came into effect. The Bank of Japan has signalled that it will keep interest rates at 0.5pc for the foreseeable future, inviting funds to step up borrowing in Tokyo to chase higher yields elsewhere through the global "carry trade".
Rising inflation across China, India, the Middle East, eastern Europe and Latin America have all created the backdrop for a major move in gold. Citigroup said a global "reflation rally" caused by cuts in US interest rates could push prices above $1,000 an ounce.
UBS has upgraded its long-term forecast, but is cautious for now. "The net long positions on the US futures markets are at all-time highs. They have been at extreme levels for four weeks and when that happens you can be sure there will be a correction. It could be any time now," said Mr Reade.

 

[Uncle Festivus]

Re: Global Property Boom/Bust

IMF raises spectre of UK house price correction


http://www.telegraph.co.uk/money/ma...007/10/17/bcnimf317.xml&CMP=ILC-mostviewedbox


Britain and Western Europe could be heading for a house price correction, the International Monetary Fund has warned, as it slashes its forecast for growth around the world.
The Washington-based Fund cut its prediction for global expansion next year by 0.4pc to 4.8pc, blaming the credit crisis which is still causing shockwaves in markets and households throughout the world.
A full half of world economic growth this year will come from China, India and Russia, it added.
In its closely-watched World Economic Outlook, it also cut its forecast for the United Kingdom's growth by the same amount to 2.3pc, and warned that Britain's housing market is one of the most overvalued in the world.
The warning will raise fears that the UK could face a similar housing market slump as the United States, where prices are falling fast in many parts of the country and the wider economy is suffering.

 

[Uncle Festivus]

The Global Property Bust bites harder....

Nationwide Building Society, the country's second-largest mortgage lender, is prepared to let its share of the home loan market shrink as it is battered by the credit crunch.
Britain's biggest building society, which writes one in every 10 mortgages, yesterday lifted the deposit homeowners need to qualify for its best rates from a tenth to a quarter of the property's value because "the cost of funding is higher and the housing market is cooling".

A spokesman confirmed the move may cost customers. "What we would like to do is continue to lend strongly but with an eye on quality. If the only way of doing that it is to accept a smaller market share, then we will."

Nationwide has seen its share of the market eroded by fierce competition - writing just 5.7pc of new mortgages in the first half - but because a smaller proportion of its funding is from the wholesale markets than the banks, it was expected to be a winner in the credit crunch. It has just completed a merger with Portman intended to position it to take on Britain's banks.

Nationwide funds roughly £48bn of its £166bn book of assets in the money markets, and the rest with customer deposits. The cost of wholesale funding has soared. Last week Alliance & Leicester, which taps the wholesale markets for £34.8bn, revealed its cost of funding had risen by £150m.

Nationwide confirmed costs had risen significantly but declined to disclose a figure, only saying the change in its mortgage policy would "not get near" to covering the increased funding costs.
Analysts said the extra costs would be significantly less than at A&L because the bank is in a weaker position.

Industry specialists claimed Nationwide's move demonstrated a sea change in the mortgage market. One said: "The growing view among chief executives is that the current market conditions are long-run, not temporary. [They] are preparing their ships for stormy weather."

He said less risky mortgage assets will be cheaper to use as collateral against which to raise funds amid fears of falling house prices.
Matthew Carter, Nationwide director of mortgages, said: "We have to adapt to changes in market conditions."

Julian Skan at Accenture warned that "matching cost to value has implications for financial exclusion" as less attractive customers are priced out of the market.

 

[KIWIKARLOS]

There is a coelation between all these countries..
Their current accounts are in deficeit

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

the big difference with aus is that our deficeit is private debt rather than government dedt. We will remain strong but i think our personal debt levels with have to level off.

 

[Smurf1976]

There is a coelation between all these countries..
Their current accounts are in deficeit

the big difference with aus is that our deficeit is private debt rather than government dedt. We will remain strong but i think our personal debt levels with have to level off.

What's the big difference between individuals having debt or having to service the same debt via the taxes? Individually it's a big difference but at the macro national economy level it's debt either way.