Global Property Guide - News and Discussions
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.
High immigration levels prompt New Zealand to continue lending restrictions
Against expectations, the Reserve Bank of New Zealand (RBNZ) is not lifting restrictions on high-debt lending, despite a housing market slowdown. In its November financial stability report the RBNZ noted that restrictions on lending to households with low deposits were working, but added that now was not the time to drop them. 'There remains a risk of a resurgence in house price inflation especially with the strong immigration flows. Consequently we don't consider it appropriate to ease LVR (loan-to-value ratio) restrictions at this time,' RBNZ governor Graeme Wheeler said. "The migration has been a surprise and we've been looking at the market accordingly and thinking about the risks. Were these LVRs to be reduced in some way, perhaps phased out over time, what would be the price response at this point in time with such strong migration?' Continuously rising home prices had forced the Reserve Bank of New Zealand to introduce loan-to-value ratio (LVR) restrictions on mortgage lenders in October, 2013, restricting banks from issuing more than 10% of new residential loans to customers with loan to value ratios (LVR) of more than 80%. Generally customers should deposit at least 20% of the home's value. Before the restrictions were imposed, low-deposit lending used to be nearly 25% of the home loans issued by New Zealand's lenders. The restrictions successfully tamed inflation and slowed down housing markets. There has been over 10% year-on-year drop in home sales. The restrictions have also led to fewer first-time home buyers entering the market. Nationally, annual house price inflation has fallen from 9.4% in September last year to 5% this year. An excess of immigrants over emigrants is pressuring New Zealand's already-stressed housing sector. The net immigrant inflow is likely to be 45,000 by year-end, according to Statistics New Zealand. This could mean housing prices rising by up to 12% next year, experts estimate, noting that rents rose by 10% when a similar migration-fuelled boom occurred in 2013. April's net immigration was the second highest on record, with 4,100 more people arriving than leaving New Zealand.
Democracy revitalizes Fiji's real estate markets
Democracy has brought good news for real estate markets in Fiji. After suffering hard times during the past decade, Fiji's property markets are rapidly recovering with big housing developments meeting sudden demand not only from natives, but also from overseas buyers. General elections in September re-established democracy in Fiji after a decade of instability due to a military coup. Prime Minister Frank Bainimarama took the reins with a promise to provide stable governance, and in just two months his promise has worked wonders for the real estate industry. Experts feel the revival was not unexpected. Property prices remained at such lows over the past few years that growth was now the only possibility. Real estate agents are reporting sudden demand for residential as well as commercial properties, especially from overseas buyers. Buyers from New Zealand and Australia are particularly showing interest. Americans are also showing interest and there has been a significant increase in inquiries and sales activity from Chinese investors, particularly in the development sector. Though stability has been the major reason behind positive sentiments in the market, agents say that it is not the only factor. "After the military coup, tourism industry was hit hard. But now the tourists are coming back. There has been an increase in number of overseas tourists over the past few months. It's been a major reason behind revival of the real estate market here," said an agent. The improving global economic outlook, low property prices in Fiji, and the possibility of good returns are other reasons for the recovery cited by experts.
The Malaysian government has successfully slowed the housing market
The Malaysian government's measures to check property speculation are working, surveys suggest. The number of home buyers has come down in some urban areas, forcing developers to reduce their sales targets. Many new apartment buildings are empty in Kuala Lumpur. Around 9% more condos were put on sale during the first half of 2014 than in the previous 6 month period, but there were 4% less purchasers, according to the Real Estate and Housing Developers' Association Malaysia. Prices have slightly dropped in some areas because there are not enough buyers. The slowdown is affecting big housing development projects. UEM Sunrise, one of Malaysia's largest property developers, has reduced its 2014 sales target from 3.2 billion ringgit (US$962 million) to 2 billion ringgit (US$599 million). The Malaysian government is imposing a slew of measures to prevent a housing bubble: The government will soon require property developers to obtain permission before making bulk sales of more than four units. The government is going to introduce a 6% consumption tax from April next year, which is expected to include property transactions. The country's central bank, Bank Negara Malaysia, has introduced a stringent mortgage policy.
The government last year doubled the Real Property Gains Tax (RPGT) on properties disposed of within three years of acquisition to 30%. It also forbade banks from offering financing via Developers Interest Bearing Schemes (DIBS), where the developer paid interest on buyers' loans during construction of a project.
Amazing opportunities in Mozambique - not for the faint of heart
'That certainly is brave!' 'You sure this is a good idea?' 'There barely is peace there now!' Those are just a few of the first reactions when we tell people about property investment options in Mozambique. And who can blame them? Investing in any country in Africa comes with doubts and worries, and nothing can be guaranteed. Looking beyond this initial barrier however one can see that African economies are among the fastest growing in the world, and many are rising out of the ashes of conflict and developing into growth economies with very bright future. Case in point: Mozambique: Yes, the history is tumultuous and violent. Yes, there is an AK-47 on the flag. And yes, not 30 years ago Mozambique was one of the poorest countries in Africa. Today, however, is not 30 years ago. Today Mozambique enjoys peace, a measure of political stability and continuity. Today, Mozambique offers stability of business investments. Today, Mozambique has several megaprojects driving the economy, making it one of the fastest growing economies in the world. Mozambique offers a wide variety of investment opportunities for savvy investors, ranging from mining projects and tourism all the way to property development. Megaprojects in Mozambique: Port of Nacala and Nacala Development Corridor Nacala, located in the province of Nampula, is home to the deepest natural port in Southern Africa - a major access point not only to Mozambique, but also to neighboring Malawi and Zambia. Already busy exporting large amounts of coal and natural resources, the port is being updated and expanded under the Port of Nacala Development Project. Additional to the harbour development come infrastructure upgrades, most notably the Nacala Corridor Project. which aims to build a 912 kilometre-long railway from the coalmines in Tete to the Nacala port. Once completed, this will allow Nacala harbour to handle 100 million tonnes of coal a year, with quick loading/unloading of the cargo, and storage. Investments for these projects are not only local, but also come from several African countries as well as Japan and Brazil - already an indication of a changing mind-set about investing in Mozambique. Nacala is a beautiful town, surrounded by tropical beaches known for scuba diving and relaxing. Just south of Nacala is Mozambique Island, a World Heritage site. With a growing number of tourists every year, Nacala is worth looking at in terms of property developments, given that Nacala is slated to grow explosively in the months and years to come. In a nutshellandhellip; For the savvy investor there are a lot of different opportunities here, keeping in mind a certain level of risk. Taking this risk though can lead to outstanding rewards in the long term. From property developments to mining, infrastructure, business and tourism - all economic sectors in Mozambique are promising great things for the future, so the time to invest is now! To find out more about investment opportunities in Mozambique, contact the Casa Nacala Property Development Team.
Foreigners feel the pinch in France
The French government has proposed a massive 20% hike in tax on second homes owned by both French citizens and foreigners in the country's most coveted areas. The 20% surcharge on the existing property tax, known as the 'taxe d'habitation', will be applicable in 30 zones across the country including Lyon, Marseille, Bordeaux, the Mediterranean and Atlantic coasts and Paris. These areas are known as 'zones tendues' where property prices have skyrocketed recently and housing is in short supply. Most holiday homes owned by foreigners are likely to come under the purview of the tax, which applies only to unoccupied homes which have not been rented out. The communes that will apply this tax are likely to collect revenue of ?150 million (US$239 million). The tax hike has drawn criticism from industry experts and stakeholders. The majority of second homes are investment properties and the hike in tax will make it harder for first time investor to enter the market, experts say. They also accuse President Francois Hollande of backtracking on a promise to halt new tax hikes. The French government recently launched two market-boosting reforms to revive the housing market: massive capital gains incentives to encourage landowners to sell land for new home building. Those who sell before the end of next year will get a whopping 30% capital gains tax break. The government is also scaling back a new law, introduced only in March, which capped rents in expensive Paris neighborhoods. Now rent caps will now only be tried in Paris on an experimental basis. Another new law increasing the number of documents that had to be provided by sellers has been scaled back. In June, the government extended interest-free loans to first time home buyers with low incomes for at least three years, and widened access.
India relaxes overseas investment norms in construction sector to boost housing
To boost affordable housing and create jobs in India, the Indian government has relaxed norms governing overseas investment in the construction sector.
Overseas investors had previously to find 10 hectares of land to develop serviced housing plots, which was proving extremely difficult in Tier 1 and Tier 11 cities. The new law will scrap this requirement, and in addition the government has slashed the minimum floor area required for construction development projects to 20,000 square metres from 50,000, and halved the minimum foreign direct investment (FDI) amount to $5 million from $10 million.
The government has also completely abolished the minimum area and capital equirements if the developer sets aside 30% of the project for affordable housing.
'These measures are expected to result in enhanced inflows into the construction development sector consequent to easing of sectoral conditions and clarification of terms used in the policy,' the government said in a statement.
'Investment in the construction development sector has a multiplier effect on the economy by way of infrastructure creation; substantial employment generation over the entire spectrum from unskilled workers to engineers, architects, designers as well as financial and other supporting services,' the government said.
Experts and industry stakeholders have welcomed the government's initiative saying that the relaxation of norms will help developers, who are facing a funds crunch.
Foreign Direct Investment (FDI) in India's construction sector was $1.2 billion in 2013-14, a drop of 8% year-on-year.
Emigrants powering Ireland's housing boom
Young Irish emigrants are heavily investing back home in Irish real estate, contributing to the dramatic surge in Irish housing prices, according to surveys. There has been a steep climb in Cork prices, with three-bedroom homes now costing nearly ?200,000. A national survey by Real Estate Alliance (REA) has estimated that Cork home prices rise have risen by 16.99% in the third quarter this year. Nationwide, prices of semi-detached three bedroom homes have reached nearly ?197,500, a rise of 9.7% over the past three months, in a sign of Ireland's rapidly-rising property market. Young Irish people living in Australia, Canada and the United States who emigrated over the past 10 or 12 years are snapping up properties back home, creating competition in the market. "Prices are continuing to rise at a pace in Dublin, but our agents are reporting the panic buying seems have gone out of the market, with less people at viewings and houses taking a week longer on average to sell," REA chief Philip Farrell was quoted as saying. "The three-tier market that REA surveys identified is still continuing, with the commuter areas outside Dublin, and larger urban areas such as Galway and Cork, growing at twice the rate in the first nine months (21.88%) than the rest of the country at 11.47%." Yet another sign of improving market is the drop in the number of distressed properties, the survey says. The percentage of distressed properties in September came down to 37% by September from 45% in June. With the improving markets, the banks have also apparently relaxed their underwriting norms as cash transactions have fallen from 66% in December 2013, to 50% in September 2014. "We are also seeing investors being influenced by the end of December deadline for obtaining capital gains tax relief over the next seven years," said Philip Farrell. "We also feel the recent proposals on mortgage finance announced by the Central Bank could have a direct impact on the market from January 2015."
Australia mulls fresh penalties for foreign buyers violating norms
Australia is likely to impose a slew of penalties on foreigners who flout its property buying laws. A parliamentary committee set up to investigate whether international buyers are pricing local middle-class families out of the housing market is likely recommend increased penalties in its report due next month, according to media reports. The penalties are likely to be in proportion to the value of the property purchased. 'The largest penalty fee that can be imposed is about $85,000,' said Victorian MP Kelly O'Dwyer, who chairs the committee. The committee is of the view that allowing allows foreign buyers who flout norms to keep profits is 'clearly creating the wrong sort of incentive for bad behaviour'. Foreigners forced to property for flouting Australia's rules will also lose the capital they have accumulated in the house between buying and selling. The committee is also considering whether to impose fees of as much as $1500 per purchase made by an international buyer. Foreign buyers currently pay nothing for applications to the Foreign Investment Review Board (FIRB). The growing number of foreign buyers has been in the public eye recently. It was recently revealed that since 2006 there have been no prosecutions by the FIRB of foreign property buyers, although many foreign nationals have been found to have broken the rules. There are many restrictions on foreign buyers. All non-residents must obtain permission from the FIRB before buying residential property in Australia. They are not allowed to buy an established (previously occupied) house. They may buy an unoccupied new dwelling, but only if the FIRB feels that the purchase will not add to the shortage of properties available to native Australians. Temporarily establishing residence in Australia for the purpose of buying a house is not a viable alternative to obtaining FIRB permission, since temporary residents must sell their property if they leave Australia. A recent survey conducted by the National Australia Bank suggest that foreign buyers are snapping up one out of every six new homes - and that number is set to get higher. Foreign demand for new homes surged in the September quarter and is set to rise further next year. Overseas buyers account for almost 17% of total demand for new properties, and for almost 25% of new properties in Victoria, or one in four new homes.
Bank of England seeks more powers to prevent housing bust
The Bank of England (BoE) has asked for new powers to limit UK loan-to-income and loan-to-value ratios, so that a UK housing bust can be prevented.
The BoE can already recommend how much banks should allow homebuyers to borrow, based on income and property value, but has no legal powers to enforce these recommendations.
Chancellor George Osborne offered the BoE new powers in June to stop the housing market over-heating; however the Bank didn't consider them at that time because of their "political sensitivity". But the BoE's Financial Policy Committee (FPC) recently set out details of the new regulatory powers it wants.
The FPC wants the government to grant it powers to limit loan-to-value ratios, so that the bank can cap the amount of loans to home buyers relative to the property's value. Similarly, the FPC wants to be able to force banks to limit loans extended to borrowers with high debt levels in relation to income.
The BoE has taken into account steeply rising housing prices while making the request for new powers, and these new "powers of direction" would empower it to act quickly in the face of what is beginning to seem like a crisis of overvaluation in parts of the UK housing market.
Parliament will scrutinize the proposals after approval by the Treasury. The BoE's new powers are likely to be granted before the next UK general election, which will take place on 7 May 2015.
Housing prices continue to rise in the UK. Average UK house prices rose 11.7% year-on-year in July, according to the Office for National Statistics, while London prices were up 19.1%.
A danger sign is that first-time buyers are taking out bigger mortgages. New home buyers borrowed, on average, 84% of the value of the property in July, up from 80% in June, according to the Council of Mortgage Lenders.
Drones: the latest buzz in the real estate world
Small drones - fitted with cameras - recently flew over an exclusive residential neighbourhood of Buenos Aires, the capital city of Argentina, and took pictures of luxury houses declared on tax returns by their owners as empty lots. As many as 200 homes and 100 swimming pools which just don't exist on paper were discovered.
By using drones, the Argentine government caught tax evasion to the tune of $2 million and is all set to summons evaders in court, warning of large fines.
For marketing luxury homes, drones are also the latest buzz. Real estate agents in the UK are using miniature planes to film not only listed properties and their neighbourhoods, but to put together an alluring marketing package for buyers. Properties spread over large parcels of land are especially suitable. These planes film the property as well as its surroundings, highlighting their most appealing features, and the footages captured by them are used to prepare a virtual tour - from the air - for prospective buyers.
Drones are remote-controlled and they can be flown only after securing due permission from the Civil Aviation Authority. Only licensed pilots can operate them from the ground.
For now, drones are surely not for all types of properties. Real estate companies say that these planes are suitable for large estates and also for hard-to-reach properties.
Will France's dramatic financial measures spur housing market recovery?
To revive France's housing market, the French government will soon offer tax breaks to property owners, the second set of market-boosting reforms in three months. The government is responding to widespread concern over the impact of housing sector's poor performance on the French economy.
French housing starts in May dropped to their lowest level since 1998.
The government is offering massive capital gains incentives to encourage landowners to sell land for new home building. Landowners who sell before the end of next year will get a whopping 30% tax break on capital gains.
The government is also scaling back a new law, introduced only in March, which capped rents in expensive Paris neighborhoods. Objectors complained that the law discouraged investors from entering the property market. Now rent caps will now only be tried in Paris on an experimental basis. Another new law increasing the number of documents that had to be provided by sellers, leading to a decline in home sales and longer transaction times, has been scaled back.
Earlier in June, the government decided to continue providing interest-free loans to first time home buyers with low incomes. The scheme, already in existence, was to have been stopped by year-end. Now it has been extended for at least three years. Access to interest free loans will also be widened.
About 50 new measures will simplify France's building regulations, reducing bureaucratic hurdles developers face when launching housing projects. The government has also decided to relax parking space requirements in new apartment buildings.
A record drop in the number of households buying residential real estate has amplified the sense of crisis. The number fell by 2.6% in the first quarter of this year, the biggest drop since the 2008 financial crisis.
The most expensive house in the world
An ultra-luxury house in Hong Kong has set a new record for its per square foot price. It is the most expensive house ever sold in the world, per square foot that is. The asking price for the property, which is on Victoria Peak, one of Hong Kong's most sought-after neighbourhoods, is HK$175,735 (US$ 22,675) per square foot. If the house is sold at the asking price it will be the world's most expensive home ever sold, on a per square foot basis. The property has been listed by Sun Hung Kai Properties. With an area of 433 square meters or 4,661 square feet, the asking price is nearly 819.1 million Hong Kong dollars (US$ 105.7 million). Needless to say, the house boasts all the ultra-modern facilities with a terrace offering breathtaking views of the mountains and a huge swimming pool. The record was previously set in 2011, when a Hong Kong mansion also located on the Peak was sold for US$ 103 million. Victoria Peak, commonly called the Peak, is a mountain on the western half of Hong Kong with panoramic views of Victoria Harbour. It is a prominent tourist destination and super exclusive residential area. Property prices climbed steeply on Victoria Peak between 2009 and 2011 like many other exclusive neighbourhoods in Hong Kong. Mainland Chinese buyers snapped up properties, driving up the prices. The listing has come at a time when the Hong Kong government is trying to contain runaway home prices by imposing restrictions. The government imposed cooling measures in stages in 2012 and 2013. Cooling measures include a 15% levy on 'non-permanent residents' and corporate property buyers, an expansion of stamp duties on quick resales of property and a doubling of duties on all properties costing more than HK$2 million (US$258,054), with exemptions for permanent residents who are first-time buyers or sell their only home to buy another.
UK home prices likely to fall 30% over four years
House prices in the UK are likely to drop by 30% over the next four years, spelling trouble for home owners due to shrinking equity values, according to Capital Economics. The UK's current housing boom has priced the majority of middle-class buyers out of the housing market. Prices need to fall by at least 22% to bring housing back to an affordable level, says the research house. "The message is clear. Houses are now so over-valued that a prolonged period of falling prices is on the cards," says Roger Bootle, managing director of Capital Economics. Bootle is a former advisor to the Tory government and also a former chief economist at HSBC. Housing prices have risen steeply in the UK over the past couple of years. However, several London districts have reported a correction in the last few weeks. The fundamental problem is that many buyers have taken on bigger mortgages, at higher loan-to-income ratios, than would be affordable in case of a rise in interest rates. Median home prices are currently 5.7 times the average salary, according to Capital Economics, and the ratio is significantly higher in London. "History tells us that such a high ratio cannot be sustained. We should therefore expect a period when house price inflation either slows, or turns negative," Capital Economics said. It wouldn't take much for housing price to slump, the report says. "All it would take is for households to be unwilling to pay the price asked...In fact, there are already signs that the housing market boom is over in London ... history suggests that it cannot be long before the rest of the UK follows." The report predicts that such a huge fall in home equity will have substantial entomic and social impacts: Young families would be forced to stay in cramped houses and home owners would be unable to move in search of new jobs. The Bank of England recently introduced new mortgage controls, effective from October 1, limiting loans to 4.5 times income. Currently 19% of London new mortgage loans are above this level. Banco Santander has already capped loan-to-income ratios at five times income for all residential applicants, while Nationwide has introduced a limit of 4.75 times income. Both Lloyds Banking Group and Royal Bank of Scotland have capped multiples at four times income for loans above £500,000. This follows the Mortgage Market Review (MMR) measures introduced by the Financial Conduct Authority (FCA) in April, which brought in a wide range of affordability checks. Customers now need to satisfy lenders that they can afford their mortgage, and must provide evidence of income in all cases. The MMR contains a requirement for lenders to stress-test borrowers with lock-in periods of fewer than five years against the standard variable rate plus an additional percentage, and requires lenders to assume at least a 1 per cent increase in base rate. The vast majority of borrowers must take formal advice, either from the lender, a mortgage broker or a financial adviser. These measures are already slowing lending. Banks and building societies are understaffed because advisers must have specialist qualifications. Already there are long delays for appointments in some areas of the UK, particularly London and the South East where the property market is booming. Brokers and financial advisers are seeing an increase in inquiries as a result, adding to their own wait times. Some borrowers who already know exactly which mortgage they want may be able to apply directly online or by post without taking advice; however, they must be able to provide full details of the deal without any input from an adviser. In addition "high net worth borrowers", with an annual income of more than £300,000 or assets worth more than £3m, will be able to take out a loan without advice.
35% jump in foreign purchases of homes in America
U.S. real estate markets are now attracting foreigners in droves. Nearly $92 billion worth of American homes were bought by foreigners during the year ending March 2014, according to a National Association of Realtors survey - an increase of 35% on the previous year. Nearly 7% of all homes on the market are being bought by foreigners.
Favourable exchange rates and affordable home prices are the top reasons, the survey concluded.
Florida remains the top choice, with 23% of all international home sales. California, Arizona and Texas represented 14%, 12% and 6% respectively. The top five cities searched online by international buyers in 2014 were Los Angeles; Miami; Las Vegas; Orlando, Fla.; and New York City.
'We live in an international marketplace; so while all real estate is local, that does not mean that all property buyers are,' says Steve Brown, president of NAR, in a statement. 'Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for investment in their future.'
Chinese buyers led the way by spending $22 billion on American real estate, followed by buyers from Canada with $13.8 billion. Buyers from United Kingdom and India spend $5.8 billion each. California was the favourite destination for Chinese buyers.
Foreign buyers have some unique characteristics:Nearly 60% of international transactions were all cash in 2014, compared to only one-third of domestic purchases. Only 42% of international buyers will use their U.S. home as their primary residence. Chinese buyers in the U.S. spend an average of $590,826 to buy a home.
South Africa to bar foreigners from buying land
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, according to Minister of Rural Development and Land Reform Gugile Nkwinti.
However the Regulations of Land Holdings Bill, which is likely to be submitted to parliament in November, 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.
South Africa has been attracting overseas buyers for a long time. Nearly 7% of land is currently owned by foreigners.
The ruling African National Congress party has faced flak for not introducing land reforms. These restrictions on foreign ownership are being touted as part of the reforms.
The government has clarified that existing foreign land owners don't need to worry. "Applying the law retrospectively would be unconstitutional. We cannot act in an arbitrary manner," said minister Nkwinti.
The proposed bill will be a fair way of ensuring that the property market stays favourable to the purchasing power of local buyers, he added.
Nkwinti said the government would use the legal definitions currently applied by the Department of Home Affairs to determine who was a foreigner.
'We don't have to reinvent the wheel, we will just use the definition of what a foreign national is in the country,' he said.
President Jacob Zuma's government will try to make the bill a law by the end of his term in office in 2019.
French government introduces slew of measures to spur housing recovery
Reeling under a housing slump, the French government has promised several new measures to make loans easier for home buyers and to simplify building regulations. The government has decided to continue providing interest-free loans to first time home buyers with low incomes. The scheme, which is already in existence, was to be stopped by the year-end, but the deadline will now be extended for at least next three years. Access to these interest free loans will also be widened. Currently, nearly 45,000 first time buyers avail of these mortgages. The government aims to boost this to at least 70,000 within a year. Other measures include increasing eligible income limits for home borrowers. About 50 new measures will also be introduced to simplify the building regulations. Many of these regulations are aimed at clearing bureaucratic hurdles which developers face while launching housing projects in France. The government has also decided to relax parking space requirements in new apartment buildings. President Francois Hollande had promised to build 500,000 new homes a year during his election campaign before taking office in 2012, but only 350,000 homes are actually being built, not enough to meet demand. There are widespread concerns over the impact of housing sector's poor performance on the French economy. Housing starts in May dropped to their lowest level since 1998. A record drop in the number of households buying residential real estate has amplified the sense of crisis. The number fell by 2.6% in the first quarter of this year, the biggest drop since the 2008 financial crisis.
Canadian housing price correction would have huge consequences, warns BoC
The housing sector is the key point of vulnerability for Canada's otherwise stabilizing economy, the Bank of Canada (BoC) has warned, noting that the consequences of a correction in housing prices would likely be huge. Steep housing price rises in cities like Toronto, Quebec, Winnipeg and Hamilton were singled out as risks by the recent half-yearly BoC's Financial System Review. 'Our analysis shows that household imbalances remain the most important vulnerability and could amplify the impact of external shocks,' said BoC governor Stephen Poloz in a statement accompanying the review. Lower mortgage interest rates have caused households to take on bigger mortgages, putting them at risk in case of rate rises, or unemployment, the bank noted. "Many smaller entities, including some mortgage investment corporations and smaller credit unions, cater specifically to borrowers who do not qualify for insured mortgages. These may include low-income individuals, recent immigrants, rural residents whose income tends to be more volatile." The bank, however, doesn't see any immediate threat of a price-correction. "The probability of this risk is low given signs that the housing market is still headed for a soft landing, but the impact on the economy and financial system would be severe should it materialize." Apart from housing, another risk is financial stress emanating from China and other emerging-market economies. The BoC sees a sharp increase in global long term interest rates as another risk to Canada's economy.
Spain's housing market on road to recovery
Mortgage loan approvals increased for the first time in four years in Spain, in yet another sign that the housing market is stabilizing after six years of slump. Home loan approvals increased 2% year-on-year in March, the Madrid-based National Statistics Institute said recently, noting that it was the first rise since April 2010. The total amount lent by banks also went up by 16%, the first increase since 2007. Housing prices are still declining in Spain, but at a slower rate. They fell 3.5% from a year earlier in the first quarter, according to the latest data from the Public Works Ministry, the lowest decline in the past three years. Lower unemployment and a gradual economic recovery are key reasons buyers, especially first- time buyers, are getting into the property market. Housing sales increased 48% in the first quarter from a year earlier. "Spain has turned the corner,' says the International Monetary Fund's (IMF) latest report. 'The recovery started in the second half of 2013 and gained strength in the first quarter of this year, with the economy growing at the fastest pace since 2008... All signs point to the end of the downward adjustment," the IMF report said. Foreign investment in Spain's housing market in 2013 was the highest for nine years, at ?6.45 billion (US$8.95 billion), up 16% on the previous year, according to the Bank of Spain. British nationals were the biggest buyers with 15.1% of total foreign residential property purchases. The French bought 9.84%, the Russians 8.58%, and Belgians with 7.26%. Spain, Europe's fifth-largest economy, has seen a drop of up to 40% in home prices since 2007.