Global Property Guide - News and Discussions
Scotland's new property transaction taxes help the poor, milk the rich
Scotland's government has decided to exempt 50% of property sales from transactions tax altogether. However, high-end home buyers will pay more. The decision to revise property tax rates has apparently been prompted by the UK Government's Stamp Duty reforms unveiled in Chancellor George Osborne's Autumn Statement in December. It comes only three months after Scotland proposed a new band-based tax on land and building transactions. Under the earlier announced rates, no Land and Buildings Transaction Tax (LBTT) was applicable on land and building transactions valued up to £135,000 (nearly $204,761). LBTT replaces Stamp Duty Land Tax (SDLT) in Scotland with effect from 1 April 2015. The LBTT-free threshold has now been increased to £145,000 ($219,928). As a result, half of the land and building transactions will be exempted from the LBTT altogether, while 40,000 buyers will have to pay less, according to Scotland's Finance Secretary John Swinney. For properties worth between £145,001 (about $219929) and £250,000 ($379121.25), 2% LBTT will be applicable. The new rates also attempt to provide relief to people buying larger homes as a new band for properties worth between £250,001 to £325,000 ($492,944) has been proposed in which buyers will have to pay 5% LBTT. Between £325,001 and £750,000 ($1,137,450), the marginal rate will be 10%. The top rate of 12% will now affect all transactions above £750,000, rather than the £1 million initially planned. Earlier, the buyers were supposed to pay 10% LBTT on all purchases worth between £250,000 and £1 million. 'The measures I am proposing send a very clear message...This government has put fairness, equity and the ability to pay at the very heart of the decisions that we have taken," said Swinney. However, Swinney was accused of taking "the fastest U-turn in history". 'Having announced his intentions at the tail end of last year to make this a fair and progressive tax, it took John Swinney just 100 days to change his mind," said Labour's Jackie Baillie. For the rest of the UK, Chancellor George Osborne announced in December a rate of 5% for properties costing £250,000 to £905,000. It was feared that the new UK tax bands would discourage property purchases in Scotland, prompting the changes to the earlier proposed LBTT rates.
Hong Kong, Vancouver and Sydney - the least affordable housing markets
A study of 378 metropolitan areas in nine countries has found that Hong Kong, Vancouver and Sydney are the most unaffordable housing markets in the countries studied. Housing affordability in Hong Kong has reached record heights. Its median home price was 17 times the median pre-tax household income in 2014, the least affordable ever recorded in the 11 years of the Demographia International Housing Affordability Survey, up from 12.6 times a year earlier. In Vancouver, median home prices were 10.6 times household incomes. In Sydney they were 9.8 times times household incomes. Markets where homes cost more than 3.1 times incomes were classified unaffordable by the study, and those where the multiple is 5.1 or higher as "severely unaffordable' by Demographia Other 'severely unaffordable' cities included San Francisco and San Jose (each 9.2), Melbourne (8.7) and Greater London (8.5). Three other markets had median multiples of 8.0 of above, including San Diego (8.3), Auckland (8.2) and Los Angeles (8.0). The study included metropolitan areas in 9 countries: Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, United Kingdom and United States. Housing prices rose by 1.6% during the year to Q3 2014 in Hong Kong, suggesting that measures imposed by the government to cool the property markets are working. Shortage of supply, steep increase in demand from both local and global property investors and regular buyers are considered responsible for continuous price rise in Sydney. "These markets have severe land use restrictions that have been associated with higher land prices and, in consequence, higher house prices..." according to the study. The U.S housing markets were comparatively affordable. All the 10 most affordable markets including Detroit and Rochester and Buffalo in New York were in the U.S. However, some other metropolitan areas like San Francisco, San Jose, San Diego and Los Angeles, all in California, were among the least affordable. Housing affordability in the U.K. worsened slightly. Homes were 5 times incomes, up from 4.9 a year earlier. New Zealand, however, reported improvement in housing affordability, with prices 5.2 times incomes. The ratio was 5.5 times a year earlier. Singapore's housing affordability also improved slightly, to five times incomes from 5.1 last year. The study has the advantage of looking at more individual towns than comparable work by The Economist, or the Global Property Guide, but it covers many fewer countries. It uses the measure of 'median multiple' (median house price divided by gross annual median household income) to assess housing affordability, a figure recommended by the World Bank and the United Nations. The median (= the middle income) is a superior measure compared to the mean (= total income of everyone divided by number of people). Demographia, which conducted the study, describes itself as a 'consultancy' but it is one with a strong ideological angle, and might be described as free-markets pressure group. It campaigns for the removal of all 'artificial' controls on housing construction, i.e., it calls for total freedom for developers to make cities as ugly as they please, regardless of the wishes of their inhabitants.
Investors pricing out home buyers in Australia
Investors are taking half of all mortgages issued to home buyers in Australia and are pricing middle class and young families out of the property markets, credit ratings agency Fitch concludes. As a result, the number of first-time buyers entering the market hit record lows in 2014. "The growth of the housing investor market has largely been at the expense of the first-time buyer. There is little doubt that first-home buyers are being priced out of the market," according to the report. Australia's homeownership rate has been continuously falling, from 70.7% in 2000 to 67.5% in 2012, the report says. "The same trend is being observed around the globe. Tight credit availability and stretched affordability should continue to lead to falling home ownership levels in many countries," the report said. "Fitch expects investor demand to remain high in Sydney and Melbourne, so long as interest rates remain at the current low level and so long as the tax incentives to invest in property remain." However in 2015, Fitch predicts housing investment to cool slightly. Rising home prices in cities like Sydney and Melbourne will dampen investment because of pressure on rental yields, slowing price growth. Fitch expects Australian home price growth to come down to 4% in 2015, from 7% in 2014. "Housing investor sentiment is fickle and if alternative asset classes offer better returns we would expect investor interest in housing to fall with some follow-through impact on demand and property prices," the report said. "After 15% growth in the past 18 months, we believe Australian house prices are near an affordability ceiling and growth is expected to moderate in 2015-16," the report said.
Foreclosure filings drop to low level in US
In yet another sign that US housing markets are recovering after a long spell of slowdown, the number of properties going through foreclosure process dropped 18% year-on-year in 2014 to its lowest level since 2006, according to California-based real estate data firm RealtyTrac. Nearly 1.12 million foreclosure filings were reported last year, down 61% from the peak of the housing collapse's aftermath in 2010, when 2.87 million properties were in the process of being foreclosed upon. "This means that the housing market can move forward on much more stable footing. One pillar of the housing crisis is gone...That will allow a lot of stakeholders involved in housing to move forward with confidence that there's no shadow inventory of foreclosures that's going to rear up and disrupt the housing recovery-at least on a national level," said RealtyTrac's vice president Daren Blomquist. The foreclosure filing rate also dropped to 0.85% meaning that one in 118 housing units filed for foreclosure. It was for the first time that it dropped below 1% since 2006. Florida reported highest foreclosure filing rate in the country, at 2.3%, followed by New Jersey (1.87%), Maryland (1.69%), Illinois (1.38%), and Nevada (1.32%). "For New Jersey, Maryland, Illinois, they were not some of the hardest-hit markets initially. They're rising now because of the delayed or dysfunctional foreclosure process in those states," Blomquist said. Among the largest 20 metro areas in the country, only four increased foreclosure activity in 2014 compared to the prior year: New York (up 31%), Philadelphia (up 15%), Washington, D.C. (up 4%), and Houston (up 2%). Nearly 5.5 million homes have been lost to foreclosure since the beginning of the financial crisis in 2008, according to CoreLogic. As of November 2014, about 567,000 homes across the country were in some stage of foreclosure, compared to 880,000 in November 2013, a year-over-year drop of 35.5%, according to CoreLogic.
Singapore home sales fall alarmingly
The Singaporean government's cooling measures have had a major impact: sales of new private homes dropped in 2014 to their lowest level for six years, according to Urban Redevelopment Authority data. Prices have also fallen. Developers sold only 7,557 units in 2014, just above half the units sold a year earlier. Nearly 22,000 units were sold in 2012 which dropped to about 15,000 units in 2013. Only 230 units were sold in December, the lowest monthly figure since January, 2009 when developers sold only 108 units. Experts believe that restrictions on borrowing and measures taken to curb speculation are to be blamed. Housing prices fell by 6% in 2015; however, experts rule out the possibility of further drop in home sales. As the first quarter of 2015 is likely to remain sluggish, the developers may be forced to price their units competitively. The government has introduced several restrictive measures on local as well as foreign property buyers to curb speculation in Singapore since 2009. Debt is capped at 60% of a borrower's income. Real estate taxes have also been increased. The government recently raised the minimum cash down payment for individuals applying for a second housing loan to 25%, from the previous 10%. The government increased the additional buyer's stamp duty (ABSD) on private and public housing for foreign real estate investors from 10% to 15% in January, 2013. Foreign buyers pay ABSD, introduced for the first time in December, 2011, in addition to the standard stamp duty rates. These rules are also applicable foreigners on long-term passes (called 'permanent residents'), but they pay at a lower rate of 5%. Singapore residents have also been brought under ABSD's ambit, having to pay 7% ABSD when buying their second home. The government also introduced a Seller's Stamp Duty on industrial properties for the first time, to discourage speculative activity in the industrial market.
Hong Kong housing shortage: Leung Chun-ying plans to increase land supply
Hong Kong will increase its land supply to deal with the housing shortage, promised Chief Executive Leung Chun-ying in his recent policy address. His government will relax out-dated restrictions and streamline procedures to facilitate building new homes. Pointing to land shortage as root cause of many social and economic problems, Leung expressed worry over young and middle class families being priced out of the housing market, deterring them from forming a family or starting a business. He stressed the need for long-term land supply planning to curb runaway property prices and rents for residential homes. There is no lack of land in Hong Kong; the problem is shortage of land that is developable. 'The process of planning takes timeandhellip;We have to take into consideration more and more factors such as the impact on traffic, environment, conservation and even air ventilation in the planning processandhellip; Planning must reflect the overall interests of Hong Kong and heed the priorities of society's need. 'Not only the well-being of individual areas in planning and development, but also the overall housing supply and demand of Hong Kong as a whole should be considered,' he said. Land shortage has caused the failure of several government schemes for affordable housing. During Tung Chee-hwa's administration, the government launched a scheme to build 85,000 new flats each year, but failed to meet the target. In 2014, Chief Executive Leung Chun-ying also failed to meet his target of 47,000 new units.
Dutch housing markets revived by economic recovery, low mortgage rates
Dutch housing markets have posted strong growth, according to the real estate agents' association in Netherlands, riding on the economic recovery and low mortgage rates. A steep increase in home sales and rising prices are a testimony to the recovery. As many as 34,622 houses were sold by NVM, the largest brokers association in Netherlands, in the last quarter in 2014, up by 30% on the same period in 2013. NVM brokers sold 116,623 homes in 2014, compared to 86,904 in 2013. Average house prices continue to rise. The average price of a sold house in the Netherlands is now at EUR 215,000 ($US253,700), up 1.3% compared to the third quarter of 2014. Housing prices in 2014 increased by 3.5% compared to 2013. 'The crisis quarters of low sales numbers and falling house prices are thus firmly behind us,' said NVM chairman Ger Hukker. 'The expectations for 2015 are positive. We expect an increase in the number of transactions between 5-10% and a price increase of approximately 2.5% - 3%. But political unrest and instability in the world can disrupt the housing market'. The International Monetary Fund also said recently that housing prices in the Netherlands and three other European countries, Denmark, Ireland and Spain have nearly bottomed out. 'Price-to-rent and price-to-income ratios are now only about 0-15% above their historical averages in all four countries,' IMF said in the cross country analysis. Real house prices have already begun to stabilise in the Netherlands and rise in Denmark and Ireland, Fund said. However, markets are unlikely to return to the buoyancy seen before the 2008 crisis. 'That's the past,' NVM chairman Hukker said. 'In many neighborhoods many homes are for sale. Home buyers have become more cautious and more critical following the crisis.'
Massive public support for rent controls in the UK, but no political will
Support for rent controls is gaining momentum in the UK as continuously climbing property prices are making housing unaffordable for middle class and young families. The majority of people want the government to impose legal limits on rents for privately rented housing, a survey has found. Nearly 59 % people showed their support for rent controls in the survey conducted by polling company Survation recently. Only 6.8% respondents were opposed. The remaining 34% didn't have an opinion on the issue, according to Survation. In London, the ratio of people in favour of legal rent controls was even higher. Nearly 64.5% of those polled said that they "somewhat" or "strongly" supported mandatory rent controls. This should not come as a surprise given the sharp increase in housing prices in the capital following the real estate boom over the last couple of years. Despite the consensus in public, no political parties have strongly come in the support of direct rent controls. While the Conservatives, Ukip, and Liberal Democrats haven't expressed their support, the Labour party has advocated an "indirect" way of dealing with the problem. The party seeks to control the rate of rent increase, rather than limit rents. A few leaders from the party including London mayoral hopeful Diane Abbott have taken a slightly tougher stand on the issue, proposing introduction of a rent control system. As per the system, landlords would be made to pay a levy for every pound they charge above a "fair" rent, according to Abbott. The Green Party is apparently the only political party that passed an emergency motion in support of a rent control policy in 2013.
Buyers must now pay retrospective tax on their Spanish property
The Spanish authorities suspect that thousands of expats - who purchased homes in Spain over the past four years -have artificially reduced property values in order to evade the Impuesto de Transmisiones Patrimoniales (ITP), Spain's equivalent of stamp duty.
As a result, these home owners are getting notices asking them to pay more ITP, in addition to what they paid at the time of purchase, according to media reports.
ITP is a percentage of the house's value, paid to the government when a property is bought. Though it varies by region, it is about 7% on average.
The Spanish authorities suspect that the property values were artificially reduced in documents, so that the purchaser could evade the ITP. Now the authorities are scanning property deals over the past four years to determine the "real value" of the property compared to the declared sales price. The purchasers are being asked to pay the difference in ITP.
Property values slumped in Spain after the 2008 financial crisis. But as prices have now apparently bottomed out there has been a rush of foreign buyers over the past couple of years. Property transactions rose by 20% year-on-year in 2014, according to the National Institute of Statistics (INE).
There's been a steep jump in mortgages issued, and a slight increase in nominal property prices, according the major Spanish real estate agency Tinsa. However in inflation-adjusted terms, Spanish real estate prices are still falling.
Property sector booms in Philippines
The Philippine property market is booming. Land values recently exceeded peak levels reached before the 1997 Asian financial crisis for the first time after the Government Service Insurance System (GSIS) sold two lots in Fort Bonifacio, measuring 1,600 square meters (sq. m.) each, to privately held firms Focus Palantier and Goldenwill noted a report by Colliers Philippines.
As a result of these sales, average land values were estimated by Colliers to have risen by18.7% and 38.2% in Manila's Makati and Fort Bonifacio CBDs in the third quarter of 2014 compared to the levels in the second quarter. In Ortigas in contrast land values only rose by 3%.
Note that these estimates are somewhat artificial, as they represent the results of large transactions, with Focus Palantier winning the bidding for the first Fort Bonifacio lot for P500,000 per sq. m. while Goldenwill won the bidding for the second lot for P458,000 per sq. m. Colliers also took into account Ayala Land's purchase of the abandoned Jaka tower in Makati's central business district (CBD).
Philippine residential property is however yet to show signs of being stretched, according to UBS economist Edward Teather's recent research note "Philippines By the Numbers (2014)".
"Real price gains in Manila property prices have been less buoyant than those on the equity market and real Manila property prices do not look stretched," he said. The Philippine Stock Exchange index rose by 22.8 percent to close at 7,230.57 in 2014, and since then has tested new highs.
Mortgage rates have been at record low levels in the recent years. Besides, household income has steadily increased leading to improved consumer confidence. The stability of the country's banking system has also played a role. Teather also noted that stock markets and other asset prices are among the best forward-looking indicators for economic growth.
The UBS economist expects the Philippines' easy credit environment to continue supportive in 2015 but less so than in 2012-2013, citing headwinds from the peaking credit cycle.
"The investment to GDP ratio has trended higher and we expect that this should continue, reversing the decline of the last decade. The risk is that investment growth has been construction-centric and may prove vulnerable to higher interest rates and when these rise from extraordinarily low levels," said Teather.
Property markets recovering in Spain, even as economy struggles
Foreign buyers are pushing Spanish property markets up in a big way, though Spain's economy continues to struggle. Property transactions rose by 20% year-on-year in 2014, according to the National Institute of Statistics (INE).
There's been a steep jump in mortgages issued, and a slight increase in nominal property prices, according the major Spanish real estate agency Tinsa. However in inflation-adjusted terms, Spanish real estate prices are still falling.
Experts believe 2015 will bring more cheer, based on last year's real estate trends. Property slumped after the crisis in 2008. Experts attribute the recovery mainly to increased interest from overseas buyers, particularly for properties in urban and coastal areas.
Resales of existing properties are boosting the property markets. Resales were up 44% year-on-year in October. Some cities and coastal areas which reporting high interest from overseas buyers include Las Palmas in the Canaries, and Madrid and Catalonia.
The number of mortgages issued by financial institutions rose nearly 30% in 2014, according to surveys.
Government initiatives like the golden Visa schemes are also boosting the market. To promote inward foreign investment, Spain started issuing residency permits to non-EU nationals in February, in return for real estate investments of ?500,000 ($670,000) or more.
US luxury housing market booms, despite weak market overall
Whether US housing markets continue to recover or not remains a topic for debate - with contradictory statistics coming up every now and then. But one thing is for sure: sales of expensive homes are on a roll. Sales of homes worth $1 million or more went up by 9% in the third quarter last year from the same period in 2013, while the overall market is not responding well to the booming economy, with total sales slipping by 1.2%. "Million-dollar-home sales will continue to be strong for the remainder of 2014 and into next year, but those sales, at just under 3% of the market, will have a limited impact on overall sales growth in 2015," a Redfin survey concluded. A million dollars will still buy what's considered a luxury home in most parts of the country, but there are places where this price point will buy nothing more than the average home, according to the Redfin survey. Several pricey California cities were at the top million-dollar-home sales list in the third quarter. A couple of cities that are considered affordable, including Chicago and Housto,n also made the list. The stock market boom and a flourishing IT industry are a few of the reasons behind the jump in sales of expensive homes. Yet the market is dominated by homes costing less than $250,000, according to the National Association of Realtors, and this market is weak. "Over 60% of the homes sold in November cost less than $250,000 and sales of such properties have come down over the past 12 months," says the National Association of Realtors.
US rents continue to rise, due to low housing inventory
Americans are paying more in rent due to low housing inventory, and a falling homeownership rate. Rents rose by an average of 3% in 2014, according to Zillow, and renters paid an extra $441 billion for apartments and houses, up by $20.6 billion on last year. One reason for the increase in rents is homeowners' fear of foreclosures. Nearly 5 million homes were foreclosed in the past seven years. Mortgage lending norms are continuously tightening. Prospective buyers, especially young buyers, are forced to rent. Partly as a result, many markets in America are plagued by low inventory, and landlords are increasing rents due to competition. The homeownership rate fell to 64.4% in the third quarter, an almost 20-year low, according to the Census Bureau. The homeownership rate is the ratio of owner-occupied units to total residential units in a specified area. The U.S. has a homeownership rate similar to other developed countries, but it has been falling since the financial crisis. Nearly 770,000 new rental households entered the market in 2014, up by 2%, Zillow said. There are 3.4 million rental households in the New York metropolitan area alone, with an increase of 63,000 in 2014. However, the steady rise in rents is likely to boost the homeownership rate in the future. "Spending a lot for rent means it's hard to save for retirement or a down payment and makes it more difficult to move from being a renter to being a homeowner. At the same time, it gives greater incentives to start seeking out an opportunity to be a homeowner," said Skylar Olsen, senior economist at Zillow. Zillow has predicted the rents will increase by 3.5% in 2015, while the home values are likely to go up by 2.5%.
Nigeria slashes home buying costs (maybe)!
The Nigerian government is working to reduce home registration costs to 3% of a property's value (from the existing 16%) to boost housing affordability. It is concerned about high expenses, which keep people from buying residential properties.
To slash costs for land titling, governor's consent and property registration processes, "the Nigerian Mortgage Refinance Company is working to enhance the enabling environment for mortgage market growth and increase home ownership by partnering state governments through a pilot state scheme,' said Dr. Ngozi Okonjo-Iweala, Nigeria's Minister of Finance and Coordinating Minister of the Economy. 'So far, 18 states have signed off, all accepting to review extant land titling, governor's consent and property registration processes to make this home ownership possible."
"It is very onerous that the present processes result in a cost that could be up to 16% of the value of the accessed property in question. That is not affordable for our people. And this is what we are trying to work on because if we don't work on it, we may have all the mortgage finance but we will not have the demand. So the plan is to scale it down from 16% to about 3%."
The spur to action came when the Nigerian government launched an Affordable Home Ownership Scheme. In the first phase 10,000 housing units are to be built, but although people have shown interest, takeup has been weak due to high costs associated with home ownership.
The Lagos State governor and the minister of the Federal Capital Territory have signed an MOU to review existing governor's consent, titling and property registration processes.
"Without the adoption of this model, it would be difficult to proceed in the provision of affordable houses for Nigerians," said Okonjo-Iweala, urging states and the National Assembly to fast track the necessary steps.
Australia - real estate loans to investors at record high now under scrutiny.
In yet another step to curb steeply rising housing prices, the Australian Prudential Regulation Authority (APRA) has asked banks to limit loans to real estate investors. They must also follow stricter guidelines to ascertain a borrower's ability to repay the mortgage.
Financial institutions must not grow loans to investors by more than 10%, says APRA, or they could face punitive action. It also said lenders should incorporate buffers of at least 2% above loan product rates and a floor lending rate of at least 7% when determining borrowers' ability to repay loans.
High risk lending and loans to investors will be under close scrutiny, APRA said. The regulatory body will again review Australian banks' lending practices in the first quarter of 2015 and will take "supervisory actions" against the erring lenders. The action may include raising capital levels.
However APRA said that it is not generally considering increasing capital requirements or restrictions on particular loan types, but will keep a watch on the market.
'This is a measured and targeted response to emerging pressures in the housing market,' APRA Chairman Wayne Byres said in a statement.
'These steps represent a dialing up in the intensity of APRA's supervision, proportionate to the current level of risk and targeted at specific higher risk lending practices in individual (banks),' Byres said.
Lending to property investors in Australia is increasing at a record pace, accounting for almost half of all residential loans in value. In 2014 it reached the highest levels since comparable records started in 1991.
Mortgages account for almost two-thirds of bank loans in Australia, making financial institutions vulnerable to sharp falls in house prices, or higher unemployment.
South African real estate attracting foreign investors in big numbers
Foreigners bought nearly Rand 9.7 billions (US$ 867 million) of luxury properties in South Africa the past 12 months. Of the 280,395 properties transferred between 2013 and 2014, nearly 8,530 were registered in the name of foreigners, according to property analysts Lightstone.
The fact that general elections in May went off peacefully played a major role in building trust among foreign buyers. The depreciation of the rand over the past two years has also made properties in South Africa more attractive to buyers from Europe and the UK.
Nearly 7% of land is currently owned by foreigners, according to government estimates, mostly from Europe.
The percentage of foreign home buyers from countries such as Cameroon, Nigeria, Zimbabwe, Angola and Mozambique rose from 16% in the third quarter of 2013 to 19.5% in the first quarter of 2014, according to First National Bank.
Bowing to popular concerns, the South African government plans to impose restrictions on foreign investment in real estate by introducing a bill which would allow a foreigner to lease land, but not buy it. The bill will limit the period of lease to 30 years only.
The Regulations of Land Holdings Bill may take another five years to become law as the administration will need to conduct a land audit to ascertain the race, gender and nationality of current owners.
Prime London property is being snapped up by African buyers
Wealthy individuals from Africa and the Middle East are now among the biggest purchasers of prime properties in central London.
Beauchamp Estates, which sells some of London's most expensive homes, recently reported that around 5% by value of London buyers come from Africa, with six countries - Nigeria, Ghana, Congo, Gabon, Cameroon and Senegal - topping the list. Nigerians are among the biggest spenders, forking out £250 million on London homes in the last three years.
'I've had an upturn in African buyers over the last few months,' says Gary Hersham, managing director of Beauchamp Estates, citing fear of Boko Haram as among the causes.
'The situation in West Africa at present is pushing rich African buyers back into Central London at a significantly higher level than is normally experienced.
'While war, disease and terrorism in West Africa grab media headlines, actually for super-rich Africans its domestic wealth, cultural ties to London, general safety and education for their children that are the key attractions for buying a home in central London.'
These super-rich look to buy property in the 'platinum triangle' of Mayfair, Belgravia and Knightsbridge. Around 80% spend between £15 million to £25 million on a residential property, with 10% spend more than £30 million.
Independent agency Black Brick say that Africans now buy 43.7% of their prime London properties. Buyers from the Middle East buy 17.1%. Asian and UK buyers via for third place, at 10% respectively.
According to Black Brick's founder and managing partner Camilla Dell, Africans have always had a strong affinity for the UK, particularly London.
'Over the last eight years, we have acquired £236 million (US$368 million) of residential property for African buyers from Nigeria, Kenya, Zambia, South Africa and Uganda,' she said.
'In particular, we've represented numerous buyers from Nigeria. Like a lot of our owner/occupier international clients, many wealthy Nigerians were educated in the UK and send their children to school here,' she added.
Black Brick's figures show that 39% of the firm's Nigerian clients have bought in SW3, SW10 and SW1 and 35% of them are buying in North West London postcodes such as NW8, NW6 and N2. In addition, 58% of our Nigerian clients have been purchasing homes in London with the remaining 42% buying for investment.
Nigerian buyers prefer gated communities for security reasons. Besides, one of the main reasons for their interest in the London properties is to provide accommodation for their children while they study here.
Decline in first time home buyers deterring US housing recovery
A decline in first time home buyers is a major reason for the sluggish housing recovery in America, say experts. Housing starts fell 2.8% in October from a month earlier to a seasonally adjusted annual rate of 1.009 million units, according to the Commerce Department. The share of first time home buyers has reached a historical low, slowing the otherwise improving real estate markets. A recent annual survey by the National Association of Realtors (NAR) suggested that only 33% of existing homes sold this year were bought by first-time buyers, down from 38% last year, and the lowest level since 1987. The share of first time home buyers typically hovers around 40%, according to the NAR. "Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who've experienced limited job prospects and flat wage growth since entering the workforce," said Lawrence Yun, NAR chief economist. "Adding more bumps in the road, is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums." The median age of first-time buyers was 31 and while the typical repeat buyer was 53 years, according to the survey. Housing markets in the USA are on the road to recovery. Though housing starts fell in October, a there was a jump in construction of new single family homes, up by 4.2% in October to reach its best pace since November 2013, according to the Commerce Department. Building permits also rose by 4.8% in October, the maximum increase since June 2008.
Corruption in property- linked Golden Visa scheme hits Portugal
Portugal's Golden Visa scheme is in the news again, but for wrong reasons this time. Several Portuguese immigration officials are being investigated on suspicion of corrupt sale of visas to wealthy foreigners. Interior minister Miguel Macedo has also resigned, after being reportedly linked to a company identified in the probe. The police have also arrested the head of Portugal's immigration and border service, Manuel Palos, and have detained 10 other people. Police said those arrested were suspected of "corruption, money-laundering, influence-peddling and embezzlement", in flouting the rules to fast track visa permits for investors, mainly from China. Portugal is one of several European countries to have introduced golden visa schemes by which residency permits are granted to foreign real estate investors, in return for property purchases. Other countries are Spain, Greece, Hungry, and Cyprus. The scheme was launched in Portugal in August, 2012. In Spain and Portugal, the minimum investment is ?500,000 ($670,000), while it is ?300,000 in Cyprus. The arrests have come at a time when the golden visa program had its best month ever in October with the scheme drawing in over ?126 million (US$158 million), according to the Portuguese Confederation of Construction and Property. More than 330 visas were issued within a year of the scheme's launch, fetching ?225 million (US$282 million). Many investors, mainly from China, Russia, Brazil, Angola, South Africa, and India, have applied for Golden Visas in Portugal, with Chinese topping the chart by a big margin. The investor has to retain the property in order to continue enjoying residency benefits.
Popularity of property investment crowdfunding soars in UAE
Crowdfunding real estate investment is fast gaining popularity in the United Arab Emirates and some other countries in the Middle East. Most schemes are being run online, and investors can sign up on the website of the company managing the scheme. The attraction? Investors can stake as little as US$5,000 in big residential and commercial property projects launched by brokerage and development firms. Though investors don't own the property outright through such investments, they own a small share of it which increases in value with equity growth. For borrowers, it is a fresh source of capital. For investors, it is a kind of gamble - though certainly that word would never be used. Crowdfunding may well be emerging as a powerful financial tool, as capital markets are largely underdeveloped in this region, experts believe. As an estimate, nearly 30 dedicated real estate crowdfunding platforms currently exist in the Middle East. The latest firm to announce its plan to launch a crowd funding scheme is DURISE. 'While an investor may not be purchasing their own property outright, it is a first step to owning a percentage of a property along with other investors via a crowd funding platform... The makeup of the Middle East is overwhelmingly young, which translates into technology savvy investors who are comfortable with technology and the concept of crowdfunding,' the company said in a statement. Overall, the money raised by crowdfunding platforms was nearly US$5.1 billion in 2013, up 81% from the previous year, according to a survey.