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International property / Articles and reviews / Research, opinions and forecasts / News and analytical reports of the week (29.11-05.12.10)
News and analytical reports of the week (29.11-05.12.10)
December 15, 2010Experts beware of a “bubble” inflating on Paris’ property market. The rate of global housing inflation is constantly slowing down. Over four years, the US property has depreciated by $9 trillion.
Prices
Over Q3, the average cost of housing in Paris, capital of France, for the first time in the history of such statistics has exceeded the mark of €7,000 per a sq. m. According to the president of Chamber of Notaries of Paris Ile-de-France, Christian Lefebvre, price growth is fuelled by activity of foreign buyers, low interest rates on mortgage loans, as well as shortage of supply. President of the MeilleursAgents.com Company, Sebastien La Font, sees certain causes for concern in such rapid increase in prices. According to him, given the current trends, a bubble can form on the market, which might burst if the interest rates increase.
According to the Knight Frank Company, in Q3 2010, prices have declined in comparison to early 2009 in more than a half of the world. Nearly 30% of all countries that were showing good performance in early 2010 have demonstrated recession in Q3. This applies, above all, to European countries: Greece, Iceland, Netherlands, Norway, Portugal, Slovenia and the UK. China, Canada, Colombia, Dubai, New Zealand, South Africa and Taiwan are also included in this list. The situation is changing most rapidly on Latvian property market: a year ago the state was among the laggards on the parameter in question, and in Q3 2010, the prices here were already 26% higher than in the corresponding period last year.
By the end of 2010, overall value of U.S. residential property will be $1.7 trillion lower than in the preceding year. Thus, in comparison to 2006 peaks, the total cost of houses and apartments in the country would decrease by as much as $9 trillion. According to forecasts by Dr. Stan Humphreys, chief economist of the Zillow.com portal, over the first half of 2011, the situation is unlikely to improve due to record high foreclosure levels.
According to the Chinese Academy of Social Sciences, the new home prices in major cities across the country are overestimated by an average of 30%. In such case, roughly 85% of Chinese families living in urban areas can not afford a new home.
According to the Savills Company, over 2010, the average cost of London’s housing has climbed up by 2%. In 2011, this figure is expected to decrease by 1%. Formerly the prices were increasing because of bankers and other professionals of financial domain spending large bonus payments on property; however the demand after such units has died down with the onset of the crisis. This couldn’t have left the prices unaffected.
Taxes
According to a recent study of the Organization for Economic Cooperation and Development, raising (or introduction) of property taxes is an excellent way to counter a “bubble” inflating on housing markets, such as those which formed in the U.S., UK, Ireland and Spain.
Forecast
According to a survey on the state of Portugal’s property market, published by the Royal Institution of Chartered Surveyors (RICS), the respondents share pessimistic short-term views on prices and sales volumes. According to Josh Miller, chief economist at RICS, growing sales on the Portuguese property market, coupled with the decrease of interest in local housing, quite naturally lead to lower prices. According to the respondents, the situation will not change in the near future. Property prices will be declining throughout Portugal, but the most southern province of the country – Algarve – will suffer the most.
Technology
An Italian architect, Nicolo Bini, has offered a functional way to build an eco-friendly house without corners - binishell. New technologies of erecting buildings will render their construction extremely cheap. Binishells resemble hemispherical concrete “bubbles” on the ground. They are built without heavy equipment: constructions of wet concrete and steel reinforcement are literally inflated. Almost toy-looking binishells are actually very robust, able to withstand hurricanes, floods and earthquakes. Improved technology also allows the construction of buildings in various shapes and sizes for any purposes - schools, office buildings, residential buildings. According to Nicolo Bini, binishells embody the most advanced method of building construction, which will significantly reduce expenses.
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