China Housing Market Booming

China's housing prices hit new high in February



China's property market grew at the fastest pace in 20 months in February, with housing prices rising at a double digit rate, despite the government's cooling-down moves, according to data released Wednesday by the National Bureau of Statistics (NBS).



Housing prices in China's 70 large and medium-sized cities increased 10.7 percent in February from a year earlier, and were up 0.9 percent compared to the previous month, said the NBS.



Prices of new homes in February rose 13 percent year on year, up 1.3 percent from January, and were mainly pushed up by soaring home prices in Hainan Province as the state government decided to build the island into an international tourist resort in December.



Haikou, capital city of Hainan, ranked first among other major cities in new home price growth, which soared 58.4 percent year on year in February. Sanya, the second largest city in Hainan, saw its new home prices up 56.1 percent.



Prices of second-hand homes climbed 8.5 percent in February from the same time last year, up 0.5 percent from the previous month, according to the NBS.



Sanya topped other cities in second-hand home prices, with a rise of 42.2 percent in February year on year, and was followed by Haikou, with a 41.7-percent-growth, according to the NBS.



The figures were announced during the annual session of the National People's Congress (NPC), the top legislature, when Chinese Premier Wen Jiabao reiterated determination to curb the excessive growth of home prices in major cities and satisfy people's basic need for housing.



China's central and local governments rolled out a series of measures to dampen the overheated property market at the end of last year, including reimposing a sales tax on homes sold within five years of their purchase and raising the down payment requirement for families buying a second house or more with bank loans.



In another move to cool the property market, the People's Bank of China, the central bank, raised the deposit reserve requirement ratio in January, and in February for the second time.

The Wealthy are Coming Back

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Wealth rebuilding bodes well for luxury market

Posted: 11 Mar 2010 07:04 AM PST

U.S. Millionaires' Ranks jumped 16 Percent in 2009, Study Says

"The millionaires’'club in the U.S. grew by 16 percent in 2009, following a 27 percent decline in 2008," according to a new Spectrem report. Affluent households -- those with net assets of $500,000 or more -- increased 12 percent to 12.7 million. At the same time, the number of households with a net worth of over $5 million rose 17 percent to 980,000. Finally, the magazine reports, "The average age of a so-called affluent investor is 58, compared with 62 for a millionaire and 67 for an investor with more than $5 million." Value of a household’s primary residence is not included in the calculation.

Resort Sells Out in Six Weeks

Resort sells out in six weeks
Resort sells out in six weeks

Alpine Homes International, Savills’s ski property partner has sold its 14 unit ski resort in Austria within six weeks of launch.

The speed of sale is reminiscent of the good old days of 2006 and 2007 says Managing Director Jeremy Rollason:

“At the peak of the market we were selling this many properties every month. It’s unusual for this market. It’s nice to put all the ingredients together and have this level of success”.

He attributes the success to a time and energy invested in finding the right product.

“We spent a long time planning the project and ripped up the original designs. We eventually went for modern interiors with more traditional exteriors which appeals to the British market. The fact that is was ski-in, ski-out also made a big difference.”

The price of the development and strong rental potential also played a part in the sales success. “Prices started at €196,000 for 2 bed apartments. At 70% loan-to-value and with gross rental yields of around 6%, the properties wash their face in terms of the mortgage and running costs. It was a nine out of ten product”.

So what would make a ten out of ten product? “Cutting the price by 50%”, jokes Rollason. It seems nine out of ten is the best most of us can hope for in this market.

You can view the development here.

China Overtakes US in Global Property Investments

China overtakes U.S. in attracting most property investment



China overtook the U.S. as the world’s biggest property investment market last year and will probably keep the lead in 2010 on economic growth and a lower reliance on debt, Cushman & Wakefield LLP said.



Real estate investment in China more than doubled to $156.2 billion last year, while the total for the U.S. slumped 64 percent to $38.3 billion, the New York-based broker said in a report today. Excluding residential investments, the U.S. came third after China and the U.K.



“China will continue to see vibrant investment activity, despite recent government measures to cool down the property markets,” Donald Han, Cushman & Wakefield’s managing director for Asia-Pacific capital markets, said in the report.



China’s economy expanded at an annual rate of 10.7 percent in the final quarter of last year, boosted by Premier Wen Jiabao’s $586 billion stimulus package. The U.S. property market is being hurt by high levels of unpaid debt and a reluctance among banks to lend as they clean up their balance sheets, Cushman & Wakefield said.



China is taking steps to rein in the real estate market as price increases accelerate. The government in January re-imposed a sales tax on homes sold within five years of their purchase and the People’s Bank of China raised the proportion of deposits banks must set aside as reserves to reduce lending. Property prices in December rose at the fastest pace in 18 months.



Eight of the world’s 20 largest property markets last year were located in the Asia Pacific region, with Hong Kong, Taiwan and New Zealand registering gains in investment, according to the report. Cushman & Wakefield is the world’s largest closely held commercial real estate adviser.



Japanese Revival



Japan will see a revival after investment fell 48 percent to $19 billion last year, it said. Some distressed properties are selling for less than their construction costs and average rental incomes tend to be higher than financing costs, making the market “compelling,” Han said.



U.S. property investment will rise 50 percent this year on falling prices and an increase in distress sales.



“Large pools of frustrated capital,” may be attracted to well-located properties with financially secure tenants, boosting prices, said Frank Liantonio, executive vice president of U.S. capital markets for Cushman & Wakefield. “Distressed sellers begin to deal with a mounting volume of properties,” he said.



In Europe, most investors are focusing on the largest, most active markets such as the U.K., France and Germany. Investment in the continent will probably rise 44 percent this year to $152 billion, the firm predicts.



U.K. prices were among the quickest to bottom out after the global financial crisis began, with values falling 44 percent in the two years to July 31. The slide in prices and the pound’s weakness helped revive investment and lift property prices.



(Source: Bloomberg, 2010-3-2)

Boomers and Second Homes

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Boomers Ready for Retirement Housing

Posted: 05 Mar 2010 02:20 PM PST

According to John Migliaccio, director of research for MetLife’s Mature Market organization, more than 78 million baby boomers, born between 1946 to 1964, will reach age 55 over the next 10 years.

He and other trend spotters believe this dominant group of home owners will lead the industry out of its slump.

Baby Boomers approaching retirement continue to be interested in buying into active-adult communities, but their moves are slowed due to a decline in the value of both their retirement savings and their current homes. To encourage seniors to find a way, 51 percent of builders of active-adult housing cut prices in the third quarter of 2009 – often as much as 25 percent or more – according to a survey by the National Association of Home Builders.

Practitioners point out that new isn’t always best. Buying an existing home in an active adult community can be a particularly good deal because these communities have extensive amenities, including golf courses and gyms. Some new construction projects on which builders have trimmed prices are not nearly as well equipped.

Source: Investor’s Business Daily, Joe Gose (02/25/2010)

Best Second Home Markets in US

Brits Staying Closer to Home for Second Home Purchases

Brits reject far-flung destinations in flight to safety‏

British overseas home buyers are reverting back to more traditional second home destinations, according to a survey of 1200 second home owners by Savills International.

During the overseas property boom, the proportion of Brits buying outside of Western Europe grew significantly as buyers became motivated by the potential for capital gains.  However, since the market turned in September 2008, buyers have returned to the traditional favourites of Spain, France, Portugal and Italy.

“In 2010, the overseas second home market will be characterised by cash-rich, lifestyle buyers benefiting from lower prices in traditional, established holiday home hotspots.” Says Charles Weston-Baker, Head of Savills International.

The survey data also confirms that 2009 was one of the worst years for the industry.  70% of respondents invested in overseas property between 2003 and 2008 but just 2% had in 2009.

Rebecca Gill, research analyst at Savills International comments. “Whilst UK overseas home ownership has doubled since 2001 recent global recessionary trends have seen take-up levels dramatically slow. Factors such as fewer overseas holidays, reduced leisure spend capacity and financing availability, unfavourable exchange rates and declining house prices have impacted second home purchasing activity.”

20% of owners plan more purchases

The positive news is that a fifth of respondents said they are considering or planning additional holiday home purchases in the future.  The top ten destinations being considered were France, Spain, Portugal, the US, Italy, Greece, Cyprus, Morocco, Brazil and Turkey.

However, further property price falls, better mortgage availability and a strengthening of sterling against the Euro are all necessary conditions before we see the market return to anywhere near the transaction volumes of 2007.

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