Property prices in many countries seem to be priced dearly still despite the recent financial crisis.
According to the Economist, ``HOME to the super-rich, Monte Carlo is the most expensive property market in the world, according to an annual report by Global Property Guide, a research firm. An apartment of 120 square metres cost an average of $47,600 for each square metre in 2008, over double the rate in Moscow, the next most expensive city. Prime property in the Russian capital fetched a shade more than in London, where prices fell for most of the year. Cairo is not only the cheapest for buyers, but it may even be a good prospect for buy-to-let investors. Property in Cairo and Jakarta saw gross rental yields of over 11% last year, bettered only by the 14.2% returns in Chisinau, Moldova. By contrast most European cities offered feeble returns of under 5%.
However, the recent market turmoil should continue weigh on global property prices. According to Global Property Guide, there are three influences that entrenches these trends, namely...
``1. Economic growth. The deep recession now beginning will have strongly negative effects on house prices. Not only do people have less disposable income, but the uncertainties are pushing them to raise their saving rates – leaving less money available for spending on houses.
``2. Expectations and price momentum are strongly down in many major markets. People tend to derive their impression of what is likely to happen to house prices, from neighbours and from the news, and the news is bad. This increases the likelihood that things will, actually, get worse, on the (well-established) basis that one of the strongest predictors of property price movements in Period T, is what happened to property prices in Period T-1.
``3. Interest rates. Base rates have been reduced, but mortgage lending rates have not fallen. The UK is typical here. Banks and building societies are refusing to lower mortgage interest rates, despite the Bank of England’s base rate cuts.
We'd like to add another two: the continued unraveling of unserviceable debt and reduced access to credit should also serve as major headwinds.
Nonetheless based on 3rd quarter 2008 data from Global Property Prices, much of the damaged have been seen in the economies that joined the property bubble shindig.
And much to our surprise, property prices in the Philippines was not spared from the global rout (as measured from Makati CBD), even if the country missed the real estate party.
Although the optimistic angle is that the degree of decline or the damage wasn't as hefty (1.4% quarter on quarter and .16% year on year).
Meanwhile, a "spectacular" investment rating had been provided for by Global Property Guide on Metro Manila which had a Gross rental yield of 10.99% per annum. This should be supportive of the domestic property prices.
According to the Economist, ``HOME to the super-rich, Monte Carlo is the most expensive property market in the world, according to an annual report by Global Property Guide, a research firm. An apartment of 120 square metres cost an average of $47,600 for each square metre in 2008, over double the rate in Moscow, the next most expensive city. Prime property in the Russian capital fetched a shade more than in London, where prices fell for most of the year. Cairo is not only the cheapest for buyers, but it may even be a good prospect for buy-to-let investors. Property in Cairo and Jakarta saw gross rental yields of over 11% last year, bettered only by the 14.2% returns in Chisinau, Moldova. By contrast most European cities offered feeble returns of under 5%.
However, the recent market turmoil should continue weigh on global property prices. According to Global Property Guide, there are three influences that entrenches these trends, namely...``1. Economic growth. The deep recession now beginning will have strongly negative effects on house prices. Not only do people have less disposable income, but the uncertainties are pushing them to raise their saving rates – leaving less money available for spending on houses.
``2. Expectations and price momentum are strongly down in many major markets. People tend to derive their impression of what is likely to happen to house prices, from neighbours and from the news, and the news is bad. This increases the likelihood that things will, actually, get worse, on the (well-established) basis that one of the strongest predictors of property price movements in Period T, is what happened to property prices in Period T-1.
``3. Interest rates. Base rates have been reduced, but mortgage lending rates have not fallen. The UK is typical here. Banks and building societies are refusing to lower mortgage interest rates, despite the Bank of England’s base rate cuts.
We'd like to add another two: the continued unraveling of unserviceable debt and reduced access to credit should also serve as major headwinds.
Nonetheless based on 3rd quarter 2008 data from Global Property Prices, much of the damaged have been seen in the economies that joined the property bubble shindig.And much to our surprise, property prices in the Philippines was not spared from the global rout (as measured from Makati CBD), even if the country missed the real estate party.
Although the optimistic angle is that the degree of decline or the damage wasn't as hefty (1.4% quarter on quarter and .16% year on year).
Meanwhile, a "spectacular" investment rating had been provided for by Global Property Guide on Metro Manila which had a Gross rental yield of 10.99% per annum. This should be supportive of the domestic property prices.
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