Global Property Guide - News and Discussions
China prohibits rural land sale for property use
China shot down the property selling frenzy by rural farmers as this has pushed real estate prices in some second to third-tiered cities in the country.
The Economic Information Daily reported that after the top-level party meeting early this week, government authorities have jointly issued a statement halting the sale of "small property rights housing", usually situated in rural areas.
Reuters confirmed in a related news report that the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development have issued a joint circular stating the prohibition because these properties were built on rural land and therefore requires state planning.
Property prices rose when earlier expectations revealed that the party may allow rural construction land be traded in a unified urban-rural market, which could enjoy the same rights and privileges as state-owned land.
"A buying frenzy has occurredandhellip; amid hopes that such 'small-property-rights housing' could be legalized," Reuters said quoting the Economic Information Daily.
Urban dwellers have fled to rural areas to take advantage of the better environment conditions and have tapped the small property housing, which has not been legalized.
China Vice Land Minister Xu Deming was quoted as saying that the state party allowed some rural land to enter a unified urban-rural land on the premise that it would conform to the planning and is under usage supervision. Nevertheless, this has some limitations.
In China, rural lands are owned by collectives and can only be used for industrial or private property development with the approval and prior requisition by the state.
Home Prices Rise
In November, China's home prices rose by the most at 10.99% from a year earlier to about US$1,765 per square metre (10,758 yuan), SouFun Holdings Ltd. said in a report after conducting a survey on 100 cities.
Home prices moved up 0.68% month-on-month from October, the 18th consecutive month of increases, said SouFun, the country's largest real estate website.
Sources: Bloomberg, Reuters
London short term lettings: Tips for finding a good one
When many people think about renting a property they are doing so with a view to the long term and to finding somewhere to set up as a home for themselves or their family. In the increasingly transient modern world, with people having to move around countries and even continents to find the work they need, more temporary lettings are becoming much more widespread.
The economic power that a capital city offers means that short term apartments in London are in demand more than they've ever been before.
There are many reasons why you might be visiting London for a short period of time. You may be studying a course or taking some training.
You might have been offered a temporary, short term contract of employment or it could be simply that you want to spend a month or so catching up with old friends and socialising amidst the bright lights of the big city.
Whatever your motivation, you'll require short term accommodation in London and, if your budget doesn't stretch to a month or more in a London hotel, then your first thought may be to start looking for a cut price hostel in which to bed down.
There is another option, however, for short term visitors who wish to rent a property temporarily but find that most flats to rent in London offer neither rent nor tenancy agreements which fit the bill.
The range of rooms to rent in London is broader than it's ever been, and means that you can find somewhere to stay which costs less than a hotel whilst offering much more in the way of privacy and comfort than a budget hostel.
The best way of finding the room or rooms that are perfect for your needs is to go through a professional agency. They will ensure that you get a thorough service, that everything is done perfectly legally and safely and that any problems will be dealt with quickly and easily.
An agency of this kind will have its reputation to think about, and will make sure that your experience is the kind of happy one which you're willing to recommend to others looking to rent a property.
Despite this, however, it's vital to have an idea of what a landlord should and should not offer, and by adhering to a few simple do's and don'ts it should be possible to ensure that your experience is a happy one.
Make sure that you do ask your landlord any questions which occur to you. A good landlord will want to make sure that your mind is at ease before you take up your tenancy, not least because this is likely to minimise the chances of any problems further down the line. Questions you might think about asking include the following:
What is the postcode? - having this will enable you to look up the location on a map, and thus ascertain exactly how close it is to local amenities such as public transport links:
Has VAT been included in the rent?
Does the property have - a phone, linen, furnishings, bath, shower, crockery, utensils etc.?
What bills are covered in the overall rent?
Is there a 24 hour number to call in case of problems?
How is the property heated?
Write down any questions as they occur to you to ensure that you don't forget them whilst speaking to your landlord or letting agent.
Check the going rate for rooms in the area to ensure that you are not paying more than you should.
Make sure you have a full understanding of the rental arrangement - i.e. whether a deposit is payable, whether any deposit will be returned, whether the rent needs to be paid in advance, what date it will be due on and so on.
Brazil's housing market in bubble trouble?
"I actually don't know it's a bubble in Brazil, but I suspect it is and, maybe if I can just say that, it would help cool the fervor," says Yale professor and Nobel prize-winner Robert Shiller, who correctly predicted the collapse of the US housing market. The fervor is evident: home prices have gone up at twice the pace of rents since January 2008. "Why would prices double in five years? What could account for that other than excitement? The prices go up every month. They always go up," observed Shiller. Brazil's policy makers say the surge is attributable to pent-up demand. "Between 1984 and 2002, real-estate values depreciated,' explains Teotonio Rezende, vice president of real-estate lending at state-owned Caixa bank. 'There was economic stagnation, hyperinflation, wage loss, high unemployment. So what we've seen since then is a readjustment of prices recovering from that undoing." Mortgage loans now stand at just 6.8% of Brazil's GDP, according to IMF data. While low by international standards, Brazil's mortgage debt increased eightfold in the last six years, according to Bloomberg. However, the rapid growth may be explained by the low starting base - most Brazilians bought houses in cash during the hyperinflation years until early 2009, when they began buying on debt. More importantly, Brazilian banks still require borrowers to deposit substantial sums for down payments. And unlike in the US, the banks do not trade in risky mortgage-backed securities. Aside from Brazil, Shiller suspects that housing bubbles may also be forming in other emerging markets like China, Russia, India, Canada, Colombia, Hong Kong and Taiwan.
Canada to disregard OECD's housing market warning
Canada's housing market is "at risk of a disorderly correction" according to the OECD's latest semi-annual global economic outlook report.
The report predicts that "residential investment is likely to weaken since the housing stock seems greater than underlying demand" although Canada's economy will still grow by 2.2% this year, 2.4% in 2014 and 2.7% in 2015 because of exports and business investment.
The OECD suggests that "should house-price pressures re-emerge, further macro-prudential measures may be needed to reduce risks to financial stability." It recommends that Bank of Canada consider gradually hiking its policy interest rate, pegged at 1% since September 2010, beginning in the fourth quarter of 2014 until it reaches 2.25% by the end of 2015.
The central bank governor has openly disagreed with OECD. In recent testimony before the Senate, Bank of Canada governor Stephen Poloz argued that the most likely scenario will be a soft landing where home prices stabilize. He said the economy is improving and could accommodate more jobs. He added that bank lending practices are now more prudent and there is no serious overbuilding in the housing market.
"Our judgment is (the housing market) is a situation that is improving, this is not a bubble that exists here that would have to be corrected. If there is a disturbance from outside our country that's another analysis," Poloz told the committee.
With an inflation of just 1.1% and an economy which still has a lot of slack, he said, "those things together give us the judgments we reach, and obviously they differ in a material way from what the OECD is saying... and it's our job to reach that final conclusion." He said interest rates will likely need not be increased until 2015.
Following the OECD report, Fitch Ratings also released a study saying Canadian home prices, which are already overvalued by as much as 26% in some regions, could fall within the next five years by up to 10%. Once this happens, "with a high level of employment and individual net worth tied to the value of the housing stock, a housing downturn could have serious consequences for the overall economy."
Rather than crash, Fitch Ratings predicts home prices will be making a "soft landing" because of mitigating factors like government's proactive policies.
"Government awareness has appeared to be high,' says Fitch, 'and if the proactive policies specifically targeting a soft landing are successful, then flattening growth or modest decline scenarios become increasingly likely."
Fall in UK home repossessions, mortgage arrears
With the UK economy now on the way to a sustained recovery, home repossessions and mortgage arrears are down, according to the Council of Mortgage Lenders (CML). On a nationwide basis, repossessions fell to 7,200 between July-September, down from 8,200 for Q3 last year. For the whole of 2013, the CML predicts there will be fewer than 30,000 homes repossessed. The number of borrowers in arrear also fell. During the third quarter, some 149,400 borrowers were behind with their payments with arrears of more than 2.5% of their mortgage, compared to 159,100 in third quarter of 2012. But Paul Smee, the CML director general, said it 'makes sense for people to think ahead now to how they will manage their finances to cope with higher interest rates, and higher mortgage payments, as and when rates rise in the future." The Bank of England (BoE) base rate has been frozen at 0.5% since 2009, but it may rise to "normal levels" of 4-5% once unemployment drops to 7%. The BoE recently raised its growth forecast for this year from 1.4% to 1.6%, and for next year from 2.5% to 2.8%. It also said the unemployment rate could fall to 7% as early as next year, instead of before the end of 2016 as originally predicted. Borrowers concerned about the continued affordability of their mortgage may opt for a longer term fixed rate mortgage. Smee advised they talk to their mortgage companies as soon as possible.
Brazil: A brief guide to houses in Praia do Forte
Traditional Bahia fishing villages are famous for their tranquility and charm, but Praia do Forte is one of the few places that still maintains that charm even though it attracts plenty of tourists from all over the world. The beaches are active, yet peaceful and save for few fishing boats moored near the beaches, there is no indication that this was just a fishing village a few decades ago.
Imagine buying a house or owning a holiday home in this peaceful place and living amongst lush tropical greenery near lovely beaches. Houses in Praia do Forte are great investments whichever way you look at them.
What Can You Expect From Houses In Praia do Forte?
As a place with a high demand for all types of real estate, properties in Praia do Forte are usually upmarket real estate offerings in nice locations near the beach or the village. Most properties have at least two bedrooms and a swimming pool.
On an average, the price is about R$1,500,000 for a mid-size house, but the range starts from as low as R$500,000 and prices could be as high as R$2,700,000 for large luxurious property. Prices depend a lot on the location, plot size, built-up area and the amenities provided. Take a look at your options at different price points.
This is the low end of the range. At about R$500,000, you can get a nice one bedroom property close to the beach. The plots are usually about 100 sq. meters and the constructed area will be about 75 sq. meters. These are good buys for use as a holiday home or for renting out. Capital appreciation can also be expected.
Comfortable Houses For A Small Family
If you have a budget of close to R$900,000, you will be able to buy a house which is perfect for a small family. These properties are located in traditional condos near the beach or village. The built-up area should be about 180 sq. meters on plots of about 400 sq. meters. Expect two bedrooms and one of them could be a suite.
Spacious Houses With Good Facilities
You can get three to four bedroom houses with multiple suites in the R$1,000,000 to R$1,500,000 range. These are usually at great locations near the beach in upmarket condos. The built-up area will be in the range of 200 to 300 sq. meters on plots that can vary between 350 to 850 sq. meters. Some properties have air-conditioning installed and some are fully furnished.
You can expect good parking facility, swimming pool and sometimes a small garden. Other facilities to look out for are round the clock security, water storage facilities, large service areas and balconies with splendid views.
Luxurious Houses In Praia do Forte
With a budget of about R$1,600,000 to R$1,850,000, you can get a luxurious house in some of the best locations near the beach or the village in upmarket condos. These properties are excellent for high class living or for generating a good rental income. You can expect about 300 sq. meters construction on plots of about 400 sq. meters.
Most properties here have four bedrooms with multiple suites and all the facilities you would expect such as a pool, garden, covered parking for multiple cars, leisure area, security, water storage, playground, children's play area, fitness center, service area and office to mention a few.
High End Houses
These large luxury houses are built on plots over 1000 sq. meters and priced above R$1,900,000. These are five to six bedroom properties with all facilities mentioned in the lower ranges. In addition, you can expect maid service and sometimes the plot has an additional smaller property with multiple bedrooms which can be used to accommodate guests or employees.
If you are looking for a house in Bahia not too far from Salvador, then Praia do Forte will be an excellent place to start your search. Real estate here is in great demand due to the various advantages of the place. With the right budget, houses in Praia do Forte will meet most of your requirements for a lovely property in a peaceful resort setting.
India: real estate development FDI to be liberalized
India is likely soon to relax restrictions on foreign direct investments (FDI) in housing construction, to help restrain the rupee's dive. The proposal before cabinet is the latest in a series of moves by PM Manmohan Singh to encourage dollar inflows. Restrictions in 13 other sectors have already been relaxed or removed, including telecommunications, multi-brand retail, civil aviation, and defense equipment. Proposed changes to India's real estate laws: The minimum area for serviced housing developments to be been reduced to 5 hectares, from the present 10 hectares. For construction developments, the minimum built-up area cut to 20,000 square metres, from 50,000 square metres. The minimum capitalisation for both wholly-owned subsidiaries and joint ventures with Indian partners reduced to $5 million, from $10 million. However, companies will need to bring in the entire amount within six months of building plan approval by statutory authority. The lock-in period for repatriation of FDI will be three years or on completion of project, whichever is earlier. Presently, the lock-in period is three years or upon completion of minimum capitalization, whichever comes later.
There was a 57% decline in housing construction FDI in 2012-13 because of uncertainty in India's economy, and because of the glut in unsold new houses. Real estate accounted for 11% of India's total FDI between April 2000 and June 2013.
In parallel with government's drive for FDI, the Reserve Bank of India (RBI) has instituted measures to encourage dollar inflows. Banks can now offer higher returns on non-resident deposits with a tenure of three years. New restrictions discourage individuals and firms from spending or investing abroad. The importation of gold coins and medallions has been prohibited, and Indian nationals are barred from buying property abroad.
The rupee is now down to 62.81 against the dollar. Some say it will depreciate further, because of the general election next year.
US home sales slowing, rising prices fingered!
Existing-home sales declined month-on-month 1.9% in September, because of increasing prices, according to the National Association of Realtors (NAR). The 'seasonally adjusted annual rate' of sales was down 5.29 million in September, from 5.39 million in August. "Affordability has fallen to a five-year low as home price increases easily outpaced income growth," said NAR chief economist Lawrence Yun. "Expected rising mortgage interest rates will further lower affordability in upcoming months.' The national average 30-year fixed-rate mortgage rate rose to 4.49% in September. The national median existing-home price was $199,200 in September, up 11.7% from September 2012 - the 10th consecutive month of double-digit year-on-year increases, according to the NAR. In the Northeast, sales of existing homes declined 2.8% month-on-month during September, but are still 15.0% above September 2012. The median Northeast price is $240,900, up 2.3% from a year ago. In the Midwest, existing-home sales fell 5.3% month-on-month during September, but are 12.6% up on a year ago. The median Midwest price was $158,400, up 9.0% from a year ago. In the South, existing-home sales declined 1.4% month-on-month during September, but are 9.9% up on a year ago. The median Southern price was $171,600, up 13.9% from a year ago. In the West, existing-home sales rose 1.6% during September, and are 7.8% up on a year ago. The median price in the West rose to $286,300, up 16.8% on September 2012.
There were 2.21 million existing homes on sale at end-September, representing 5 months' supply, compared with 4.9-months' supply in August. The median time on market for all homes was 50 days in September, up from 43 days in August, according to NAR.
The rate of price increases has been decelerating, according to Anand Nallathambi, president and chief executive officer of CoreLogic Pending HPI research. On a month-on-month basis, home prices increased by only 0.2% in September 2013. Home prices, including distressed sales, increased 12% in September 2013 on a year-on-year basis.
"We are seeing a slowdown in the rate of price appreciation over the past few months from the rapid pace experienced over the first half of this year,' said Nallathambi. 'This deceleration is natural and should help keep market fundamentals in balance over the longer term."
Foreign investors hit by anti-speculation measures in Malaysia's 2014 budget
Malaysia's booming property market is expected to slow, once new taxes in the 2014 budget take effect next year. Beginning January 1, real property gains tax (RPGT) will double from the current 15% rate. For disposals within the first three years, the new RPGT will be 30%. For citizens, RPGT will be 20% for disposal in the 4th year, 15% for disposal in the 5th year. No tax is levied on disposals after the 5th year. For non-citizens and business firms, RPGT will be 30% within a 5-year holding period, and 5% in any subsequent year. The minimum price of property that can be purchased by foreigners will increase from RM 500,000 (US$157,282) to RM 1,000,000 (US$314,564). Property developers and financial institutions will be banned from using the Developer Interest Bearing Scheme (DIBS), whereby the developer absorbs the home loan interest of the buyer during the period of construction of the property. Projects with DIBS features are favoured by investors who flip properties as soon as construction is completed. These changes should not discourage long-haul investors, or end-users. Prices in Malaysia remain much cheaper than in Singapore or Hong Kong.. And unlike those two countries, Malaysia will not impose any additional stamp duty. The sale, purchase and rental of residential properties will be exempted from the 6% goods and sales tax (GST) that takes effect on April 1, 2015. However, there is no similar exemption for the sale and purchase of goods and services used in residential construction. Meanwhile, the government is upping spending on housing projects for low- and middle-income earners. RM 578 million (US$181.82 million) is allocated for 16,473 new residential units to be built by the National Housing Department (NHD) under the People's Housing Programme (PHP). Another RM 146 million (US$45.93 million) is earmarked for construction of 600 new units for rent by NHD. Houses under the PHP are priced at between RM 30,000 (UD$9,436) and RM 35,000 (US$11,009) per unit in the peninsula, and RM 40,500 (US$12,739) per unit in Sabah and Sarawak. And RM 1 billion (US$314.56 million) will be earmarked for 80,000 more housing units under the 1 Malaysia's People Housing Programme (PR1MA), priced 20% below market price. The government is also introducing a new Private Affordable Ownership Housing Scheme, "MyHome," with RM 300 million (US$94.37 million) given to developers building low- and medium-cost houses, with a RM 30,000 (US$9,436) subsidy per unit. The budget also provides for the creation of a National Housing Council, a one-stop agency that will be responsible for overall planning, policy and strategy formulation, coordination and monitoring of issues and developments affecting the country's housing sector. Its members will be drawn from federal agencies, state governments, the NHD, PR1MA, SPNB and the private sector.
UAE Central Bank caps mortgage lending
The UAE Central Bank is limiting mortgage lending to prevent a repeat of the 2008 property market collapse. The rules impose new mortgage restrictions on the 23 national banks and 28 foreign banking units in the country: For homes worth more than Dh5 million (US$1.36 million), loans for first-time buyer expatriates should not exceed 65% of the property's value, while loans for Emiratis will be capped at 70%. For second and subsequent property purchases, loans for expatriates should not exceed 60% of a property's value regardless of cost, while loans for Emiratis will be limited to 65%. For off-plan property, the maximum loanable amount is 50% of the property's value regardless of purpose, value or nationality. The maximum mortgage period shall be 25 years and the maximum age at the time of the last repayment is 65 for expatriates and 70 for Emiratis. The total monthly repayments should not exceed 50% of a customer's monthly income regardless of nationality. The total loanable amount should not exceed seven years' annual income in the case of an expatriate and eight years' annual income for an Emirati.
The imposition of mortgage lending caps has been precipitated by the continued rise in home prices notwithstanding the doubling of the transaction tax from 2% to 4% by the Dubai Land Department recently.
Industry observers however note that the new mortgage restrictions may slow entry to the housing market by end-users but not investors or speculators, who mostly buy with cash. A study by consultancy firm Jones Lang LaSalle (JLLS) found that about 80% of Dubai home buyers now pay in cash.
Dubai's safe haven status along with its world-class facilities and its strategic location make it a destination of choice for large-scale overseas real estate buyers.
According to Dubai Land Department, this year Indians have already bought properties worth over Dh8 billion (US$2.18 billion), British nationals bought Dh4 billion (US$1.09 billion) while Pakistanis have invested more than Dh3 billion (US$0.82 billion). Funds are also flowing in from Central Asia, Russia and China.
Spain's buy-to-let market attracts distressed property investors
Foreign and domestic property investors are bulk-buying foreclosed homes in Spain, to rent out. On average, repossessed residential properties in Spain's major urban centres can be had at 71.6% below original value, according to Fitch Ratings.
Last year, legislation was passed making investing in rental properties more enticing. Under the new law, rental rates have been de-linked from inflation and may now be increased by the landlord more frequently. The new law also reduces the duration of leases, as well as the waiting time for evicting non-paying tenants.
Foreign owners renting out their property to working people under 30 years of age can even, under the new law, claim tax relief ranging from 60% to 100% on the rental income.
In contrast, tax breaks for individual home buyers have been set aside. Ordinary citizens, suffering from a shrinking disposable income and the credit squeeze, are now finding it harder to enter the property ladder, leading to expectations that demand will dramatically rise for rental homes in coming years.
Spain's two-year old recession has ended. The country saw 0.1% growth in the third quarter, according to the National Statistics Institute.
Major property investors like Blackstone Group and Goldman Sachs focus on mass purchases of foreclosed properties, particularly apartments that are already occupied, in Madrid and other urban centres where housing demand is high and tenants can generally afford to pay rent.
In July, Blackstone Group bought 18 apartment buildings from the city government of Madrid for 125.5 million euros ($173 million). In August, Goldman Sachs and Azora Capital bought 32 social-housing developments from the regional government.
Madrid is offering another foreclosed property portfolio with 1,458 housing units and 1,588 garages in and around the capital. The minimum asking price is 67.2 million euros (US$90.25 million). Blackstone Group and Goldman Sachs are reportedly bidding.
Sareb, the state's bad bank, must sell soured real estate assets worth 1.5 billion euros (US$2.0 billion) this year. To date, it has already disposed of properties worth 1.2 billion euros (US$1.6 billion). It is reportedly putting another package on the market which includes land ready for construction in the Madrid area worth 350 million euros ($477 million).
Most bulk buyers bid on foreclosed homes sight unseen, especially when there is stiff competition from other investors. In Spain, this can lead to costly consequences. Spain has a big and growing problem of squatters. It can take three years to evict them, often entailing messy court battles. Meantime, the investor cannot resell or rent out the property.
UK and Ireland fuel tourism growth in Lanzarote
Lanzarote is a unique tourist destination, boasting surreal volcanic landscapes and breathtaking beaches. Along with the other six Spanish owned islands in the Canaries chain it forms an archipelago that is sometimes referred to as the European Caribbean - as here sun starved holidaymakers from countries such as the UK and Germany can enjoy a beach break at any time of the year. A factor that also makes the island a hot favourite with overseas investors, as owners of holiday villas and apartments on Lanzarote are able to enjoy a full twelve month rental season too.
The proximity of the Canaries to key markets such as the UK (which is just a four hour flight away), along with the ready availability of cheap flights from budget airlines such as Ryanair and easyJet makes Lanzarote both accessible and affordable to today's traveller. And despite the recession in Europe the islandandacute;s tourist industry has remained relatively buoyant as a result, with passenger arrivals pushing the 2 million mark in 2012 and further growth expected this year.
The UK is the key tourist market for Lanzarote, with British visitors accounting for around 45% of all passenger arrivals. Now, thanks to the growing pace of recovery in Britain, consumers there are finding that they have more disposable income to spend on holidays abroad and this is translating itself into an increase in UK arrivals - with the number of tourist passengers climbing by 9% during September 2013 alone.
The resurgence of the Irish market is even more impressive, as Eire is still undergoing painful economic corrections as their austerity programme continues to bite. Yet despite this the number of holidaymakers visiting Lanzarote from the Republic has soared again in 2013 - up by 21% (source Frontur Canarias) across the first nine months of this year.
Property prices on the island have fallen since the onset of the crisis and are now close to their 2002 levels, with the average price per square metre now standing at ?1218.00 (source ISTAC, Canarian Institute of Statistics). This is some way below price levels in other comparable sun spots such as the Balearics, yet rental yields are much higher thanks to the year round season, making Lanzarote an attractive proposition for investors struggling to find returns on their capital from more traditional savings and investment options.
Mortgages are also cheap in Spain, as the European Central Bank has recently dropped the Eurozone interest rate too just 0.25% in order to stimulate growth. As a result we are now seeing an increase in demand for good quality rental properties amongst both traditional markets such as the UK as well as newer groups of investors, such as the Russians.
Why home-ownership causes unemployment
A strong correlation between high home-ownership levels and high unemployment rates is shown in a recent study co-authored by David Blanchflower and Andrew Oswald.
Using unemployment and home-ownership statistics from 1900 to 2010 for the states of the USA except Alaska and Hawaii along with data gathered from millions of randomly sampled Americans, the study found that rises in home-ownership in a state are followed by substantial increases in the unemployment rate after a lag of up to five years.
"It suggests that a doubling of home-ownership in a state would be associated in the steady state with more than a doubling of the unemployment rate," says the paper.
For example, the study shows that the five states that had the highest increase in home ownership (an average of +23% in Alabama, Georgia, Mississippi, South Carolina and West Virginia) since 1950 had a rise in the unemployment rate of 6.3% between 1950 and 2010. In contrast, the five states that had the lowest home ownership increase 1950-2000, saw unemployment rise just 3.5% over the 60 years from 1950-2010.
The study also found that high home-ownership leads to people staying put and commuting further and further to jobs, in turn creating cost and congestion for firms and other workers. It also precipitates zoning restrictions and other NIMBY (not in my back yard) activities where home owners block new businesses. It fosters ossification of mobility and reduces dynamism in the economy.
"We have been collecting data for decades now and it is appropriate to go public on the results,' said Oswald: 'We find that a high rate of home-ownership slowly decimates the labour market. The USA makes a valuable 'laboratory' in which to study this issue, because the different states have a language, currency, and culture in common."
The authors say that while "the data used in this paper are almost wholly from the United States... our conclusions may have wider implications." They believe their ideas apply equally well to Europe where countries like Spain and Greece which have high home-ownership (80%+) also have high unemployment (20%+) and countries like Switzerland, Germany and Austria which have low home-ownership have correspondingly also low unemployment rates.
The release of the Blanchflower and Oswald study coincides with the release of a similar work in Finland, done independently by Jani-Petri Laamanen at the University of Tampere, which draws the same conclusions.
Countries which pursue policies to promote more home-ownership may unintentionally be adding to their unemployment problem. Providing incentives for investing in affordable rental property seems a good way to address the problem.
Bundesbank: No property market intervention, despite German boom
Residential prices in some German cities may be overvalued by 20%, but the authorities will not intervene, says Deutsche Bundesbank.
"The expansion in housing supply is still not sufficient to meet the additional demand for housing, especially the need for new apartments. The incentives to invest must therefore remain consistent with market demand," said the Bundesbank in its October report. Besides "there are no signs of substantial exaggerations in the housing market as a whole," added the Bundesbank.
The exaggerated rise in house prices is confined to Germany's seven biggest cities, Berlin, Munich, Hamburg, Cologne, Frankfurt, Stuttgart and Danduuml;sseldorf, where on average prices of apartments have risen more than 25% since 2010.
However the report says there are "clear signs of a dispersion [of price rises] from cities to their surrounding areas." It worries that "inflated expectations or speculation motives are fuelling a regional dispersion of price impulses."
Germany has long been known as a nation of house renters. More than half the population do not own their own homes. But this now seems to be changing. Today, many private individuals seek long-term security by converting assets into real estate in case the euro goes bust. According to the central bank, "The belief that the value of one's assets can be best secured through property ownership was certainly an argument for many households to consider investing in property." Low interest rates for mortgage loans, and low yields in stocks and bonds are factors too.
Both Germans and foreign investors see Germany as safe. 'After the real estate bubbles in the US and several European house markets burst, the German property market, which had been quiet for many years, became more attractive to international investors,' the report said.
Moreover, despite the increase in prices over the past few years, residential property in German cities remains cheaper than in other world-class cities in Europe like London, Rome or Paris.
Finally, rental yields are high and still rising, and as the report assured, "the Bundesbank is opposed to restricting the amount by which rents can be increased."
Opening of Mexican beachfront sets off goldrush
Since word got out that foreigners may soon be allowed to own Mexican beachfront houses, property developers, investors and buyers have been scouring Mexico's Pacific coastline for hot deals.
Foreigners cannot now own land within 50 kilometres of the coast or 100 kilometres of an international border in Mexico, because of a 100-year old restriction written into the country's 1917 constitution. To exercise property rights they must partner with a Mexican bank and sign a fideicomiso agreement, which has a 50-year term, annually renewed. The bank holds title, but the foreigner is given authority to manage and control the property. Getting into a fideicomiso is complicated, and foreigners typically dislike the process.
In May, Mexico's House of Representatives approved a constitutional amendment removing restrictions on foreign ownership of residential property along coasts and borders. Sponsored by both the Institutional Revolutionary Party and the National Action Party, the amendment is now with the Senate.
President Enrique Pena Nieto is pushing for freer entry of foreign capital into Mexico, and the amendment is part of this. He has also supported opening Pemex, the state-owned oil company, to foreign and private investors. The president seems likely to muster the needed votes to push through the constitutional changes.
Americans and Canadians have long favoured Mexico, which is near, and has a lower cost of living. With the beachfront property restrictions removed, Mexico will become even more attractive.
Haunted island for sale in Croatia
Croatia's 5-hectare Daksa island on the Adriatic is up for grabs for only 2 million euros (US$2.76 million). It comes complete with woodland, private beaches and its own Franciscan monastery. It is right in front of Dubrovnik, which is a UNESCO World Heritage Site and one of the favorite Mediterranean playgrounds of the rich and famous. It is also reportedly haunted by ghosts.
On October 24,1944, just after WWII, 48 suspected Nazi collaborators, including the village priest and mayor, were rounded up by Yugoslav partisans and brought to Daksa where they were summarily gunned down in cold blood without proper trial. The corpses were left to rot in the open, remaining unburied for decades. The crime has never been investigated. The locals say the spirits of the massacre victims to this day continue to roam the island demanding justice.
Daksa was placed on the block three years ago by owners Nila Perica Dusilo Florshutz and Franica Dusilo Cavich. So far, there are no buyers. The island remains uninhabited and tourists very rarely venture there.
The county of Dubrovnik-Neretva has the legal right to offer to buy the island first. However it was hit hard by the financial crisis, and hasn't exercised its right. Daksa is thus now available to any interested buyer.
Macau's property is booming, even though foreigners are selling
When the average price for a square metre of residential property in Macau reached MOP 98,187 (US$ 12,293) - the highest ever - many foreign owners sold. Yet housing prices are still rising. Why? Because Macau's economy is booming, and local buyers have taken over where foreign investors left off.
According to the Monetary Authority of Macao, non-residents sold property worth MOP 8.88 billion (US$1.10 billion) in the first half of this year, draining MOP 6.6 billion (US$0.83 billion) from the territory's real estate market.
But Macau's gaming revenue reached MOP 148.7 billion (US$18.62 billion) during the first half of 2013, far exceeding expectations, according to Jones Lang LaSalle (JLLS). The profits and wages are driving Macanese property higher.
"We expect Macau's property market will maintain steady growth in 2H13, benefited by the better-than-expected gaming revenue, low interest rate environment, stronger capital flows in the market, and limited supply," said Alvin Mak, JLLS' Associate Director for Research.
Most new units are already pre-sold. So supply isn't likely to increase much any time soon, ensuring not only that the prices remain high but also driving rentals up. From January to June high-end residential rents rose 9.6%, while mass and medium residential rents increased 10.3%, according to JLL.
Housing demand is boosted by foreign labor working on the Macau Light Rail Transit, the Taipa Ferry Terminal, and several casino-resorts at Cotai. There were 118,600 foreign workers in Macau in May 2013, up 8,000 from December 2012. When Cotai's gaming complexes open in 2015, more foreign labour will pour in to man the new casinos and hotels.
Macau's government has instituted measures to prevent the property market from overheating, similar to Hong Kong. In addition, new laws and regulations to bring Macau's real estate industry practices to international standards came into effect in July.
Once foreign investors see that these new laws and regulations really do protect their interests, they may return.
Foreigners buoy Paris' luxury property market
Recently, a Qatari buyer paid 44 million euros ($58.5 million) for a 2,600 square metre 19th-century mansion near the Champs-Elysees. He was not alone. Paris' luxury market is in comeback mode.
Till recently the city's market for luxury residences priced one million euros and above had been (at best) stagnating. Wealthy French people like actor Gerard Depardieu decided to go abroad to escape President Francois Hollande's increasingly burdensome tax regime. The resulting glut precipitated a price drop of more than 10% in a year. With prices now reduced, Paris upscale property suddenly became attractive to foreign investors. More so, when they realized that most new tax measures do not apply to them.
Prices in London's upscale Knightsbridge and South Kensington are about 20,000 euros (US$27,604) per square meter, and in New York's Upper East Side starts at 15,000 euros (US$20,703). Similar properties in Paris's 16th arrondissement are priced at just 10,000 euros (US$13,802) per square metre, according Barnes, a property brokerage specializing in the luxury market.
Not all foreign buyers are in Paris solely for the investment opportunity. Many wealthy buyers from the Middle East want to get away from the growing unrest in their region.
Not all foreign buyers are in Paris solely for the investment opportunity. Many wealthy buyers from the Middle East want to get away from the growing unrest in their region.
Nicaragua's Ortega threatens to reclaim Guanacaste Province from Costa Rica
Nicaragua may ask the International Court of Justice to "restore" Guanacaste from Costa Rica, a province "Nicaragua lost to Costa Rica's expansionist politics back in 1824," President Daniel Ortega has twice warned.
Guanacaste is one of Costa Rica's most prosperous provinces, with tourism and real estate driving growth. It has spectacular resorts and mansions, like Mel Gibson's 500-acre Playa Barrigona, and the Riu resorts which Canadians favor. Guanacaste also has a thriving aerospace and science industry powered by research at EARTH University, and engineering at the Ad Astra Rocket Company in Liberia. Six new major hotels are scheduled to open between late 2013 and early 2014.
Ortega's threats added to the already strained relationship between the two Latin American neighbors. However, Costa Rica's Foreign Vice Minister Gioconda andUacute;beda told media that 'as it [jurisdiction over Guanacaste] was solved over a century and a half ago, in the border treaty.... We will not discuss it, but if he [Ortega] decides to take it to the ICJ jurisdiction, as he's getting used to, he will have to comply with international law procedures. That's the way an unarmed nation like Costa Rica solve disputes.'
While this may have entirely nothing to do with the Nicaraguan claim, Mel Gibson is now selling his Costa Rican property for US$29.75 million. The actor originally bought the property for US$ 24 million in 2007 during the filming of "Apocalypto."
Sydney property prices set to soar in 2014
Sydney's property prices are set to soar in the next year, with a boom in prices of about 15 to 20% predicted in 2014. SQM Research released their yearly Housing Boom and Bust Report anticipating an enormous rise in prices for Sydney properties in particular, while the weighted average of gain in Australia's capital cities is in the midst of 7 to 11%. The areas of Sydney that are expected to see the highest increase in house prices are the upper north shore, northern beaches, northwest Sydney, western Sydney, the inner west and the eastern suburbs, which are predicted to see price rises greater than 15% in 2014. While the housing recovering was finally commencing in late 2012, predictions were made that couldn't stand up to Sydney's performance over the last year, given the historically low interest rates available at this time. Sydney has always seemed to be rather sensitive to changes in interest rates, which is clearly why the higher interest rates in 2009 and 2010 negatively impacted the city's housing market. Sydney's best performing market sector has been properties with prices no higher than $2 million, however first time home buyers have been struggling to buy their first properties during the recovery. They may, however, see a change to come, as some believe more will take the state government concessions opportunities available to them to get on the property ladder. On the other hand, one of Sydney's grandest properties is set to break Australian property price records, as agents say a nine figure sale is likely. The property is a waterfront mansion that has been in the Fairfax family for over 100 years. The sale of the mansion, which is known by Elaine, will break the Sydney record of $53 million which was sold in May of this year. The incredible rise in housing prices expected for Sydney in the coming year makes this an excellent time to look for a home to buy in the area. Visit NPBS to find out more about obtaining a home loan before the property prices begin soaring.