AUSTRALIAN PROPERTY PRICES DOWN

Australia, the only developed nation not to suffer a collapse in property values following the credit crunch in 2008, may go through that downturn now, analysts warn. Prices rose strongly in 2009 and 2010, but fell 1.7 per cent at the first quarter of 2011, the biggest drop since mid-2008, and prices fell 0.3 per cent in April and May.

The county's four biggest banks consider near-full employment, a housing shortage and population growth will stop the market crashing, but bearish overseas investors argue Australia's high debt levels, unaffordable homes and rising interest rates – the highest in the developed world, mean property values may plummet 40 per cent.

The median property price in Australia's eight biggest cities was USD503,000 in May, according to market monitor, RP Data. Mortgage payments more than 30 days late hit a record 1.79 per cent in the first quarter of 2011.

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PROPERTY PRICES RISE FASTEST IN PARIS

Luxury property prices are rising faster in Paris than anywhere else in the world. The value of apartments and houses valued at Euro2 million or more in the French capital rose 22 per cent over the past twelve months research from Knight Frank estate agency shows. Hong Kong, Helsinki, Shanghai and Beijing were the other top five risers.

Parisian homes are rising in value, because investors from the BRIC nations are ploughing money into the city which they consider a safe haven in uncertain economic times. A limited number of properties available for sale means bidding is strong, so that pushes prices up further.

Limited supply is a key feature of the Paris housing market – strict planning controls makes building brand new homes in the sought-after central arrondissments well nigh impossible, so refurbishing existing properties is the key source of supply for the city's luxury housing market.

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MALDIVES PROPERTY MARKET OPENS UP

Millionaire homes have appeared in growing numbers on Indian Ocean islands since Mauritius and the Seychelles opened up their property markets to overseas buyers during the past decade. Now the Maldives is getting in on the act – the archipelago has allowed foreigners to buy homes at resort communities since November 2010, since when dozens of brand new holiday homes have come up for sale.

At Six Senses Laamu Private Residences, 16 holiday homes are on offer at prices starting at USD3 million, and at Sovena Fushi eleven villas priced from USD4 million can be purchased through Cluttons Resorts.

Six Senses hotel spa facilities are available to residents at Laamu Private Residences. They may need them - after arriving at the Maldives capital, Male, residents must fly 40 minutes to a local airport before taking a 15 minute boat ride to reach the resort. Sovena Fushi is a 30minute seaplane flight away from Male.

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GLOBAL PROPERTY PRICES FALL

“Global housing markets take a turn for the worse”, says the Global Property Guide. Its latest survey of international house prices shows they are falling in a growing number of countries, including Britain and New Zealand which were recording increases this time last year.

The Eastern hemisphere continues to do better than the West. Hong Kong tops the table (up 19 per cent), followed by Singapore (up 8 per cent). Both rates of growth are slower than one year ago.

There are some surprises. Thailand's property market, which had been blighted by price falls for several years, has turned positive, with prices rising 4.6 per cent, year-on-year. Now, it is previously boom boom China's turn to be come the laggard of Asia, recording a 3.5 per cent fall in property values.

Meanwhile, in Europe, the bounce-back in the Baltic states has slowed, while prices continue to fall in Ireland, Spain and Portugal. Norway is the region's strongest market, recording a 6 per cent increase. France and Germany are treading water.

Interestingly, Austria continues to defy international trends. House prices in its capital, Vienna, have increased 6.5 per cent, which means this is the seventh consecutive year of increases.

Prices have turned negative in Australia and New Zealand, and they are falling in the United States. Price rises have slowed in Canada.

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MIDDLE EAST'S BANGLADESH HOUSING CRISIS

Political turbulence in the Middle East is having disasterous consequences for Bangladesh, a country well outside the region.

The Bangladesh housing market is reeling from the effects of hundreds of thousands of its citizens based in the Middle East being unable to send back remittances, because they are losing their jobs. Remittances are an important source of capital for the Bangladesh housing market.

Adding to the chaos is the Bangladesh government's decision not to allow gas and electricity connections to new buildings, to save energy for agriculture to avoid food shortages. This means new homes cannot be handed over to buyers estate agents say.

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EUROZONE PROPERTY PRICE FALLS

The Eurozone lurches from crisis to crisis, sending property values tumbling in its wake. Worst affected are the so-called PIGSs – debt-laden Portugal, Ireland, Greece and Spain.

Property prices fell in Portugal last year and will do so in 2012 the London-based Royal Institution of Chartered Surveyors forecasts. Some commentators say prices could drop by 20 per cent by the end of 2012 providing “bargains” for overseas buyers.

Economists warn Ireland may go back into recession and need another bailout, exacerbating five years of price falls.

In Spain, the country's central bank says the housing market downturn will last five years, which means values won't stop falling until 2013. The country's two previous slumps lasted that length of time.

In Greece, that country's central bank expects prices to fall this summer following two years of decline, and Athens University forecasts demand for Greek homes will fall to record lows.

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GLOBAL PROPERTY PRICE TRENDS

The global housing market has “stumbled” estate agency, Knight Frank, says. It's Global House Price Index, quarter four, 2010, shows property values rose 2.8 per cent in the year to December 2010. This is slightly down on the 3.1 per cent rise in prices recorded in the twelve months to the end of quarter three, 2010.

Hong Kong's prices rose fastest in 2010 - 20 per cent. Latvia, Israel, China and Singapore were the other top five locations. Cyprus and Ireland filled the bottom two slots.

Knight Frank's head of residential research, Liam Bailey, says the number of countries recording price falls in late 2010 grew.

"It looks increasingly likely that Asian markets will escape a crash in prices, but in many of the previously ‘hot markets’ (India and China) price falls later this year seems a realistic assumption,” says Bailey, "Across Europe and the US the lack of bank lending is likely to extend the recent period of price reversals. Outside of the luxury markets in the global city hubs, it is difficult to see what could bring about a rapid improvement in the housing markets of the developed economies."

Knight Frank's report follow's The Global Property Guide's survey which shows some European markets weakening and Asian markets rising.

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CHINA BUYS NORTHERN IRELAND

Following several months of secret negotiations, China has bought a 100 year lease on Northern Ireland from the British government. The GBP70 billion deal wipes out Britain's national debt and gives China trading and political benefits, including membership of the European Union.

The transfer of power is expected to take place on May 1st, 2011.

The Republic of Ireland has guaranteed not to challenge China's annexation of Northern Ireland in exchange for China agreeing to pay off the Irish national debt. All Ireland's nationalised and part nationalised banks will be transferred to the Bank of China as part of the deal. This will enable the Chinese to develop banking operations in Europe.

Sources close to Beijing say the Chinese will develop Northern Ireland into a low tax manufacturing, logistics and trading centre.

The Northern Ireland assembly will go into emergency session today to discuss the plans. In an unusual show of unity all of Northern Ireland's parties are said to be against the deal.

A spokesman for the British government said "this historic agreement will ensure Britain enjoys a bright economic future. There will be benefits for the people of Northern Ireland and for all of the people of the British Isles from having China invest its national surplus on our shores. It will secure jobs, bring peace and create economic growth for years to come."

A spokesman for Northern Ireland's biggest politcal party, the Democratic Unionists, described the deal as "utter foolishness".

HAPPY APRIL FOOL'S DAY

LONDON'S ARAB BUYERS

Overseas buyer enquiries for Egyptian holiday homes nosedived after Cairo's citizens took to the streets in February, but there's plenty of money flowing out of the country.

Wealthy Egyptians are suddenly more prevalent in luxury home markets abroad. A London estate agent says businessmen with a “loose association” to the former Mubarak regime are keen to invest.

Wealthy individuals from other turbulent Middle Eastern states want London property brochures too. Demand focuses on properties in the GBP4 million to GBP10 million range, but some want super-prime GBP20 million residences. And these buyers are not hanging around. One individual has bought a home through London estate agents Kay&Co without even visiting it. The enterprising estate agency sent one of its partners to Cairo during the protests who came back with a dozen clients eager to buy.

Meanwhile, back in Egypt, observers consider property fortunes may be made and lost in the coming months as investors either bag a bargain or lose their shirt buying into chaos.

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GLOBAL PROPERTY MARKET REPORT

The global housing market recovery has stalled. The Global Property Guide says prices rose in 15 countries and fell in 21 others in 2010.

Property prices in Greece, Turkey and the United States fell further in 2010 than the previous year, while Bulgaria, Hungary, Lithuania and Ukraine continue to suffer badly, though prices leapt 20 per cent in table topping Latvia.

Bottom of the table was Ireland where values plunged 11 per cent, compounding an 18 per cent collapse in 2009. The Scandinavian property boom is petering out.

Price rises in Asia were “robust” despite market cooling measures by governments. Singapore property prices jumped 13 per cent, putting it second in the table of 36 states surveyed. In the Philippines, prices rose in 2010 following two years of decline.

ASIAN PROPERTY BUBBLE DEFLATING

Want to share in the south east Asian economic miracle? Think again. This region has been popular with investors from around the world wanting to cash in on its booming housing markets but website, The Global Property Guide's enthusiasm is waning. Taiwan is “overvalued”, Indonesia “sluggish”, Thailand “weak” and Vietnam “uncertain” it says.

A Cushman and Wakefield Vietnam survey shows only 14 per cent of new luxury apartments in Ho Chi Minh City were sold in the first eight months of 2010. In China, the bubble is expected to burst in major cities like Beijing and Shanghai where few residents can afford high property prices.

A glimmer of light for the Philippines – Benigno Aquino's landslide election victory may end political and economic uncertainty there, but has not done so yet. And more cold water - the Guide calculates the combined costs of buying and selling homes in Indonesia and Philippines for foreigners can reach 25 per cent of a property's value.

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NEW YORK REAL ESTATE MARKET INVESTMENT

After resisting the double dip afflicting most of the rest of the United States property market since spring 2010, Manhattan's housing market began to slip back at the end of last year. So, does that mean the good times are over the Big Apple's luxury homes sector? Probably not, this chill in the market may pass just as easily as winter when spring arrives.

Word has got around that some of the United States's most famous Bear investors, those with good reputations for calling the bottom of a market, are buying homes in New York - John Taylor and Nouriel Roubini, the "Dr Dooms" who predicted the global financial crisis, and John Paulson, the hedge fund manager who successfully bet the housing bubble would burst in 2006. Other Wall Street investors are making purchases too.

Commentators consider the arrival of the Bears auspicious, the best sign for new condos like 505W37 (pictured above) and the rest of the Manhattan property market since the financial crisis hit three years ago. Wall Street Bonuses are rising, so more money could flow into the city's real estate sector soon, and all this excited chatter about Bears may encourage others to make purchases.

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EUROPEAN HOLIDAY HOMES FORECAST 2011

In Europe, established holiday home markets like the Swiss Alps, southern France, south west England and the Italian regions of Tuscany and Umbria are expected to do best in 2011.

“People are going back to the tried and tested areas,” says James Price, partner at Knight Frank, “I don't get as many calls for emerging markets as we used to get. There are very few speculative investors around.”

“Switzerland has been strong. It is well established, you get a very good, safe, secure and high quality of lifestyle, and they restrict the number of permits for foreign home owners which investors like.”

Interest in the southern French regions of Cote d'Azur and Provence is particularly strong.

“Our French team across the south of France has had record level of viewing, so people are looking again,” says Price.

Activity in Europe's holiday homes market would stay focused on prime areas like the Tuscany, French Riviera and Swiss Alps in 2011, partly because banks preferred lending to cash-rich individuals purchasing in these markets he says.

“We don't expect prices to rocket in any of these places, prices may even go down a little bit more, but we will see more people looking,” he says.

Oversupply problems mean the Spanish and Portuguese holiday home markets remain weak says Price. However, the Spanish island of Ibiza and the Portuguese island of Madeira are attracting overseas buyers.

“Despite the winter season, we are seeing constant demand for Ibiza from all ages funnily enough and such a range of people, not just the young and trendy,” says Camilla Mabbott, marketing director at estate agency, Aylesford International.

The Portuguese island of Madeira, a long time favourite with Britons is attracting buyers from new locations. At the island's completed Palheiro Estate development overlooking the capital, Funchal, buyers from eastern Europe, South America and South Africa are buying apartments and villas.

Across Europe's holiday home locations, developers selling off-plan would continue to struggle Price expects.

“Unless developments are substantially out of the ground they (developers) can wave goodbye to any interest in it,” he says, “People want to be sure that it will be built.”

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IRELAND PROPERTY FORECAST: THE BAILOUT AFFECT

What does the international bailout of Ireland's public finances, impending general election and warnings of debt default mean for the Irish housing market? Probably not much in the long term.

After Ireland's upper legislature passes the government's finance bill on Saturday allowing a Euro67 billion bailout by the EU, IMF and Britain to go ahead a general election will be called, probably for late February.

Ireland's next government, most likely a coalition of conservative Fine Gael and socialist Labour, will want to re-negotiate the bailout package agreed by the outgoing coalition government of conservative Fianna Fail and environmentalist Greens. They want those “punitive” 5.8 per cent interest rates charged by the EU on loan repayments cut. Bank economists warn those high interest rates invite default. Rates must be halved to 3 per cent at least, to keep the Irish on board US bank, Citi, says.

If Ireland defaulted on debt repayments this would infuriate the EU, so this is unlikely, but not impossible, especially if anti-EU, ultra-nationalist, far-left Sinn Fein gets a grip on the balance of power in the next Irish Parliament.

Although damaging initially, debt default may make little difference to the housing market in the longer term says Brian O'Driscoll, head of residential research Ireland at estate agency Savills says.

“There would be a couple of years of complete and absolute instability in the market and then it would stabilise,” he says, “It would not be an absolute disaster.”

The Euro6 billion of tax rises and spending cuts in the government's bailout budget does little for housing. Although stamp duty was cut from a top level of 9 per cent to 1 per cent for homes valued under Euro1 million and down to 2 per cent for homes valued above that figure, this will not be enough to compensate for job losses, wage freezes and tax rises arising from the budget which leaves Irishmen and women with less to spend on home buying.

The Irish property market's biggest problem is the tens of thousands of homes lying empty, especially in the new build “ghost housing estates” outside Dublin O'Driscoll says. Last year University College Dublin calculated 170,000 homes were empty following massive over-construction during the boom years of the mid-noughties.

The lack of mortgage funding is another drag on the market O'Driscoll says.

“In 2007 there were 15 mortgage lenders, now there are three and they are nationalised or being nationalised,” he says, “You won't get a loan unless you work in government or have rock solid employment. Lots of categories of business are deemed to be unacceptable. Without a fluid mortgage system it is hard to have a fluent property market.”

O'Driscoll considers consensus opinion among forecasters is for property prices to fall -10 to -15 per cent by the end of 2012. Prices of some new build homes outside Dublin may drop -40 per cent in 2011.

Prices will keep falling until the economy and mortgage lending expand substantially, and the supply of excess housing is soaked up he warns. Dublin's suburbs will remain the country's least weakest market.

Ireland's property slump began in June 2006 since when values have halved and buy-to-let investors have become nearly extinct. Only 250 investors bought Irish property in 2010 compared to 30,000 in 2006, a contraction of 99 per cent.

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GLOBAL PROPERTY MARKET FORECAST 2011

Did you heed Warren Buffet's advice? Two years ago he told us “the time to get greedy is when others are fearful”. He said this after he bought a chunk of troubled Goldman Sachs bank when most other investors were rushing for the exits - the banking crisis was at its peak.

At that time I argued Buffet's approach can work for property investment, a view that proved correct - many investors who got greedy for bricks and mortar over the last 24 months have been rewarded.

The global housing slump reached its low point two years ago, since when house prices have risen by 10 per cent on average estate agency, Knight Frank, reports.

“Each quarter we are presented with further evidence that the impact of the global recession on the world’s housing markets is diminishing,” says Liam Bailey, head of residential research at Knight Frank, “Economic stimulus measures put in place by many western governments such as ultra-low interest rates, first time buyer concessions and targeted support for banks have encouraged house buyers.”

Investors who ploughed money into East Asian markets in 2010 may feel they have the Midas touch. Property prices rose by more than a quarter in Hong Kong, and by a third in Singapore and China's biggest cities, last year. Those who braved the Latvian housing market must feel smug. The Baltic state's housing market was devastated by the crash. It's home prices sank 43 per cent from a 2007 peak, but in 2010 they recovered strongly, rising about 20 per cent, making it Europe's best performing housing market over the past twelve months.

Other buoyant markets included Brazil, Russia, Australia and South Africa. In France, modest property price rises kept pace with inflation.

It does not always pay to be greedy. Those who bought homes in most other European countries including Spain, Ireland, Monaco and Switzerland may wish they had not done so, because values fell. The same was true for most of the United States.

Knight Frank's forecast for 2011 is for a gentle recovery in the West and a reining in of excessive price rises in the East.

“The potential risks to future growth are many and varied,” says Bailey, “For western economies the availability of new funding, the scale of austerity measures, earnings and employment growth will prove critical to the health of their housing markets. In Asia, a lot hinges on how far governments intervene in fiscal policy.”

Some European countries, including France, Italy and Switzerland, will enjoy price rises this year the agency says. This must be viewed as the best case scenario, because a Eurozone crisis has not been averted. If the unflaterringly labelled PIGS(debt laden Portugal, Ireland, Greece and Spain) fail to manage their finances better, then their economies and housing markets will suffer. And so will the rest of Eurozone which would have to bail them out.

Even if the Greeks, Irish and Iberians do keep a grip in 2011, they will still suffer. Knight Frank forecasts a 3 per cent fall in Irish property values in 2011. However, a new set of tax rises and public spending cuts in the wake of the International Monetary Find (IMF) and European Union (EU) bailout will surely exacerbate price falls. Harsh austerity measures in Spain, Greece and Portugal will drag down property values in these countries.

However, if the Euro were to collapse on international exchanges as a result of government debt problems, then Eurozone property would become much cheaper for buyers from outside the region - the resulting influx of Britons, Chinese, Arabs, Kazaks and others could help buoy some markets, especially top end holiday home destinations and prime areas in capital cities. Paris, Cote'D Azur, Tuscany, Umbria and the Alps would top the list - these destinations are established and not over-built.

Even without Eurozone government debt crises, a lack of mortgage funding will continue to squeeze demand and prices in the region in 2011.

Britain's position is precarious. The EU is Britain's largest trading partner and its banks have lent heavily to Ireland, so it's economy and property market would struggle if the Eurozone's financial crises spread. Such potential disasters aside, economists are split on Britain's prospects. Bailey forecasts a modest 2 per cent rise in Britain in 2011, partly because demand outstrips limited supply. Consultancy, Capital Economics forecasts a -10 per cent fall, because a shrinking mortgage market and government austerity programme will drain the housing market of cash.

London was Britain's strongest housing market in 2010, mainly because of strong demand from foreign buyers attracted by the weakness of Sterling. Bullish economists say the capital's private sector revival will give London home prices a boost in 2011, but sceptics say they will fall further than elsewhere in Britain, because affordability levels are overstretched.

Most likely, Britain will be a mixed bag. Property markets in locations dependent on public sector funding and old declining industries will fair badly, while those in areas with vibrant private sectors with strong knowledge-based businesses, good communications and attractive, well maintained housing stock, will do better. In short, locations, like central London, Reading, Brighton and Cambridge have the best prospects.

Ironically, Europe's strongest property market in 2011 may be in a country shunned by the EU: Turkey - it came through the banking crisis relatively unscathed, its mortgage market is expanding, the economy is growing and interest rates are coming down. Morocco is tipped as a hot spot by some agencies - the growing list of luxury holiday home resort communities being built there is a vote of confidence from developers.

In the United States, a revival in Wall Street's fortunes meant property markets in high end locations of Manhattan and Brooklyn boomed in 2010. The Hamptons, the playground of bankers and stockbrokers, also fared well. As for most of the rest of the United States, the end of homebuyer tax credits in April signalled the start of another slide in US property values. Capital Economics expects US property prices to be 5 per cent lower than they are now this time next year. Knight Frank is more positive, forecasting a 1 per cent rise in 2011.

In Asia, bubbles are forming. In Beijing, the average cost of a home is 22 times earnings. Taiwan's market is rife with speculators buying up property in anticipation of large Chinese investment in the years ahead.

In Hong Kong, prices are inflated largely because interest rates are barely at 1 per cent. In locations like Hong Kong and the United Arab Emirates currencies are pegged to the US Dollar, and their interest rates to those of the Fed. US interest rates are low to help reflate the American economy, but in Hong Kong these low rates are over-inflating an economy that is already boomimng.

Eventually, when the Fed raises interest rates, they will rise correspondingly in Hong Kong, so people taking out large, cheap loans in that Special Administratuve Region of China today will find them becoming expensive. If banks absorb these rate rises, then borrowers may escape unscathed.

After losing half of its value in 2009, the UAE property market slipped back a relatively modest -6 per cent in 2010.

Steven Morgan, head of estate agency, Cluttons UAE, is confident about Dubai's prospects.

“A number of encouraging indices such as the re-entering of (lenders) Tamweel and Amlak into the mortgage market, increased tourism numbers in Dubai, and growing container shipments through Jebel Ali all point to stabilisation and even modest recovery within the real estate market in 2011,” says Morgan.

On the other hand, the supply of housing in Dubai is enormous, so a quick-turnaround in fortunes is unlikely.

In these uncertain times many of us may prefer not to buy a home fearing we may lose money if markets fall. Maybe the way to approach this conundrum is to ask “What would Buffett do?”. The Sage of Omaha is sanguine about uncertainty. Plan for the long term he advises. “Only buy something that you'd be perfectly happy to hold if the market shut down for ten years,” is a famous Buffett quote. He was referring to stocks and shares, but, as we have found, his approach works for property ownership too.

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