US Property Market Recovery May Be Slowed by Weaker Jobs Growth

During the last three months the jobs growth in the US has been relatively weak, and is likely to slow down the recovery in the housing market. Recently the unemployment rate increased to 8.2% as businesses are still failing to hire new workers.

Last month the jobs growth was just 69,000, while at least 400,000 new jobs need to be added to the economy in order for it to be considered to be on the road to recovery. There are concerns that the worldwide economy may be slowing, and that they could be more economic troubles just around the corner, especially with the continued Eurozone debt crisis.

Historically it's been shown that property transactions usually lag behind employment gains by at least a year. At the moment first-time buyers and investors account for around two thirds of all house purchasers.

Many homeowners are trapped due to lack of equity, or have negative equity, while those who still have adequate equity are often reluctant to move due to low home prices. At the moment mortgage rates are at their lowest level ever, with a recent Freddie Mac survey showing the fixed rate for a 30 year mortgage was just 3.75%.

It could be that more people will be prompted to take the plunge during the busy summer selling period, provided they are able to qualify for a mortgage. At the moment the banks still require very high credit scores in order to obtain conventional financing.

However government backed schemes such as the FHA require lower credit scores to qualify. Certain areas of the country, especially those in the hardest hit regions are already showing significant signs of improvement. In addition job gains have been reported in warehousing and transportation, as well as healthcare.

Will Turkish Tourism Sector Be Able to Maintain Historic Success This Year?

The Turkish tourism sector performed relatively poorly during the first quarter of this year, amid concerns that some of its rivals may be making a strong comeback. This could undermine the impressive growth Turkey has achieved during the last 10 years or so. Between January and March Turkey received 6.35% fewer tourists compared to the first three months last year, and tourism income dropped by 9.7% compared to the same period.

These figures are important as the tourism revenue helps reduce the current account deficit, and Turkey has worked hard to diversify and develop its tourism sector. Last year it was able to exploit troubles in countries such as Egypt, Spain and Greece, in order to attract potential visitors, and this saw the country receive record numbers.

Last year Turkey received more than 30 million visitors, and earned $20 billion in tourism revenue, according to data from the World Tourism Organisation, but some figures estimate the number of visitors may have been as high as 36 million. This year there are concerns that Turkey will be able to maintain these high figures, as rivals are currently restructuring their tourism industry in order to mount a formidable comeback.

During last year Egypt’s tourism revenue fell by 29% due to domestic unrest, but the first quarter of this year saw figures recover. It's the same story in Greece, although many people may still choose to book holidays in Turkey due to safety concerns in both of these countries. Tourism experts are confident the country can maintain its foothold in the market, and point out Turkey has become much more popular during recent years and that the service industry as a whole has improved considerably. They are confident there will be a 5% increase in the number of tourists this year compared to 2011.

Indonesia Acts to Tighten Lending Rules

From June onwards, lending institutions in Indonesia will tighten rules surrounding lending, which will include strict minimum payments for property purchases. The Central Bank is anxious to avoid the potential of any loan bubbles forming which could slow growth, and sees minimum payments as a way of slowing consumer loans, as levels have surged over the last couple of years.

Anyone wanting to purchase a home will only be able to borrow up to 70% of the property’s value, although homes of less than 70 metres will not be affected by these new rules. Lending is expected to grow by 27% this year, and last year private consumption accounted for 56% of the country’s economic growth which was 6.5% in 2011.

According to economists, these new regulations will discourage middle income earners from investing in speculative property. Indonesia is facing high demand for property, but the growth of the housing market has been hampered by government red tape, high interest rates, high construction costs, and restrictions on foreign ownership.

According to Bank Indonesia’s Residential Property Survey, prices rose by 4.5% to the year ending the third quarter of 2011, and property prices have been steadily increasing over the last couple of years or so.

However some 70% of people buying residential property are doing so for their own use, so there is far less risk of prices rising due to investors, but there are worries over the condominium market becoming oversupplied, as an average of 8,468 units have entered the market annually over the last five years, but this year the figure is expected to reach 20,302.

Indian Developers Agree to a New Code of Conduct

The Confederation of Real Estate Developers Associations of India (CREDAI) has agreed to a new code of conduct which it hopes will resolve many of the complaints made about the process of buying a house. Most of the complaints centre on delays in taking possession of the property, additional money being demanded over the agreed price, and failure to meet commitments.

In the past buyers have been concerned that their only recourse over complaints is long and drawn out litigation, and that the process lacked transparency and accountability. The 8,000 plus members of CREDAI will now have to sign a Code of Conduct which is a self-governing mechanism designed to get developers to adhere to certain levels of conduct.

These include being more transparent over area calculations and specifications, and to declare the amount of compensation payable in the event of any delays over the project being finished. The aim of the new Code of Conduct is to increase transparency and to help buyers differentiate between good developers and bad developers. In addition CREDAI has introduced a new Consumer Grievance Redressal Forum which allows any member of the public who has bought property through a CREDAI member, to lodge a complaint against them if they are dissatisfied with the level of service they received.

CREDAI has already run a pilot project, and found that 90% of the complaints against developers were resolved due to peer pressure on the forum. The forum is comprised of legal experts and experienced developers who decide whether the complaint will be upheld. CREDAI is currently running an advertising campaign to increase awareness of this new code, and hopes that this will restore the faith of consumers.

New Zealand Government Introduces New Bill to Ban Foreign Companies from Buying Rural Land

The New Zealand government is looking at introducing a new bill into Parliament which would prevent foreign companies from buying up rural land, and is due to controversy over Chinese companies trying to purchase lucrative dairy farms on the North Island.

The Chinese company, Shanghai Pengxin had put in a bid to purchase 16 dairy farms in Crafar on the North Island, and this bid had already received approval from the government before being overturned in the High Court. The bid was overturned as the High Court felt any potential benefits must be measured against an alternative buyer. Labour leader David Shearer wants the law to be changed so governments reject any foreign bids to purchase New Zealand farms unless the bid would result in more exports, and more new jobs being formed than from a New Zealand bid.

Such a law would mean most bids to buy New Zealand land would be turned down, and only those implementing new technologies or introducing new products would be allowed. Although the government already has the power to turn down sales of farms to overseas buyers the Labour leader doesn't think it is being properly implemented, and that most sales result in profits flowing out of the country.

Selling farms to overseas buyers is also likely to raise the price out of reach of native farmers which would be very detrimental to the country. At the moment any decision by the Overseas Investment Office to sell property to foreigners has to be approved by two government ministers who are able to decide which factors are relevant to the sale. If the new bill is made law it will be much stricter.

New Zealand Property Market Shows Signs of Gathering Pace

The property market in New Zealand is showing signs of gathering pace as residential property sales increased substantially in January compared to the same month in 2011. Latest figures from the Real Estate Institute show the number of transactions increased by 25% to reach 4,073 in January 2012 when compared to January 2011. Although this is a huge increase, January last year was notable for being the worst month ever recorded. Nationally the median sales price is $355,000, which is 4.4% higher than January last year.

The REINZ stratified house price index is just 3.8% below its peak in 2007 and has shown an annual increase of 4.3%. House prices are remaining relatively stable which may be down to buyers reluctance to take on too much debt due to continuing economic uncertainty.

The median house price in Auckland increased by 4.7% to reach $471,000 compared to a year earlier, and sales increased by 27% in January. Wellington house prices increased by 4.1% to $385,000 from January last year, and sales were up by 15%. In Christchurch property prices increased by 2.3% to $337,444, and property transactions rose by 4.1%. Dunedin house prices rose by 11% to reach an average of $245,000 while sales increased by 35%.

House prices are being held up by a shortage of homes, especially in Christchurch and Auckland. Auckland in particular has very few new homes coming onto the market and this is forcing property prices upwards. In spite of the fact that property prices are rising, they are not increasing at such a rate to fuel worries about a new housing boom, with property prices expected to rise by 3.5% this year.

Asking Prices of UK Property Increases by 1.2%

December saw the average asking price for new homes in the UK increase by 1.2% compared to November, according to Smart New Homes. The fourth quarter of 2011 saw consecutive monthly rises with prices increasing by 2.6%, while the annual growth rate was 3.2% in 2011.

This is significant as it is the first year to show positive growth since 2006, and the average price of a new home is now £227,098 which is £7,029 more than December 2010. Although the market for new homes continues to show price stability, the same can't be said of the general market which saw prices decline over the last quarter of the year. Asking prices for new homes are now more than in the general market for the first time since March 2009.

The largest annual price growth for last year was in the West Midlands where prices increased by up to 12.6%. In London prices fell by 7.8% over the year and by 2.2% during the fourth quarter, but rose by 3% in December. There were fewer new homes coming onto the market during the last quarter of 2011 as many developers chose to delay projects until New Year, but annual growth was still 10.2%.

The largest house builders also saw the number of completions increase last year compared to 2010, and many have purchased more land. Apparently most new homeowners are looking for a property with contemporary design which can cater to modern-day needs. Builders have also managed to maintain affordability through introducing new mortgage products, and the industry is also working with the government for the introduction of its new mortgage indemnity product later on this year.