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Global Property / GP Guide's mid-2010 Forecasts

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Global Property / GP Guide's mid-2010 Forecasts

 

Charts to go with this thread

Interactive chart from The Economist: "Clicks and Mortar" re Global House Prices

http://www.economist.com/blogs/freeexchang...al_house_prices

 

Global Property Guide: Mid 2010 Property Markets Forecast

 

by GLOBAL PROPERTY GUIDE .. Jun 11, 2010

 

The world's property markets are on the road to recovery, but investors will have to be careful about which markets they select. In a new report, the Global Property Guide makes recommendations for residential property investment during 2010 (download the full Global Property Guide Mid-2010 Property Recommendations report).

 

The world is no longer moving in one direction, as it did during the crash and the bull market of 2006-2007. Some countries' real estate markets are moving down (most notably Bulgaria, Ireland, Iceland, Slovakia, Spain, the Philippines, Greece, the Netherlands and, for political reasons, Thailand). Others are moving up (Hong Kong, Singapore, Taiwan, Australia, Israel, Finland, Norway, Sweden, and the UK) (see The World's Housing Markets at Q1 2010).

 

However, the general trend is up, due to lower interest rates and higher government spending.

 

Things are back to normal.

 

Well, not quite. The world's housing markets will surely be affected by a major long-term trend, the adjustment - deep and powerful - of economic forces which is now impacting everything we do.

 

The leading developing countries are growing rapidly and are assuming much greater importance.

Relatively speaking, the developed world is losing ground.

 

For 15 years the loss of momentum of the developed world was disguised by the housing pseudo-boom, but now the issues have become very apparent.

Inevitably property markets will in future reflect these facts. Some ripples on the surface of the waters:

 

In Latin America:

 

Interest rates are in long-term decline, due to better Central Bank policies

Economies are booming

Tourism is rising

The residential property boom that began 3 years ago continues

Rental yields - critical indicators of the health of property markets - are still high

Latin currencies are rising

Our selections for investors: Peru, Panama, Brazil, and Chile

Possible: Colombia

 

In the US:

 

The economy is recovering

The dollar is rising

Residential property valuations are attractive in some states, and are already attracting investors

Our selections for investors: states whose property markets fell dramatically during the crisis, beginning with Florida

 

In Europe:

Property markets have not sufficiently adjusted from their 15-year rise. Residential property yields are poor throughout Europe.

The panic over the Greek and other deficits shows no side of abating

The Euro is falling. Currency depreciation should somewhat offset increased fiscal stringency - a positive.

There are buying opportunities for opportunities for non-Euro buyers, but of themselves residential properties are not an appetizing investment in most of Europe.

 

Our selections for investors: Turkey, Hungary

Turkey, because of its young population, the opening to the East, and its competent government.

Possible: Hungary, because its incompetent government may provoke a crisis which would make its low prices and excellent yields even more attractive.

 

/more: http://www.globalpropertyguide.com/investm...arkets-Forecast

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Thanks to newcomer, Alex Barton, a global comparison:

 

Canada's real estate overvalued, survey says

 

A real estate agent puts up a 'sold' sign in front of a house in Toronto on Tuesday, April 20, 2010. (Darren Calabrese / THE CANADIAN PRESS)

 

Updated: Tue Oct. 26 2010 / CTV.ca News Staff

 

Canadian house prices are overvalued, but not as much as those in Australia, Hong Kong or France, according to a new worldwide survey.

 

The data published in The Economist magazine's annual survey shows Canadian homes cost on average 23.9 per cent more than they are worth. That's somewhere around the middle of the pack. The scale ranged from Australia at the high end, where homes are 63.2 per cent overvalued, to Japan at the low end, where houses are 34.6 per cent undervalued.

 

Canada's house prices were up 4.5 per cent from one year earlier. And between 1997 and 2010, prices rose a whopping 70 per cent, the report said.

 

Compared to a year ago, when 15 of the 20 countries on the list were in negative territory, this year only four countries were undervalued.

 

"Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is down a bit from the summer," the report states. "House prices in China rose by 9.1 per cent in the year to September, compared with a 12.4 per cent rise in May."

 

The Economist's analysis of "fair value" of housing is based on comparing the ratio of current house prices to rents, with the long term average.

 

Simply put, the purchase price of a house is divided by the rent it could have earned per year, and the result is the price-to-rents ratio.

 

A high result could mean a house is overvalued, while a low number means it could be undervalued.

 

Here are the results of The Economist survey:

 

Overvalued countries:

 

* Australia .. : 63.2 per cent

* Hong Kong: 58.1

* Spain ...... : 47.6

* France .... : 42.5

* Sweden .. : 41.5

* Britain .... : 32.0

* Canada .. : 23.9

* Netherlands: 23.6

* Belgium . : 21.6

* New Zealand: 20.2

* Denmark : 19.4

* Singapore: 19.2

* China .... : 18.1

* Ireland .. : 13.2

* Italy ...... : 10.5

* U.S. ...... : 4.6

 

Undervalued countries:

 

* United States Using the Case-Shiller national index): -2.1

* Switzerland: - 6.4

* Germany . : -12.9

* Japan ...... : -34.6

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