Our prognosis for the Mallorca property market

As above, there are plenty of solid reasons to believe there will be no significant uplift in property markets in any country, even the strongest such as mallorca, during the course of this year and most likely the first half of 2010 too.On top of the global macro economic considerations there are factors specific to the Spanish property market that also put pressure on prices across the region. These are highlighted in the article mentioned above.

However, it is also very clear that activity has picked up for and that sales are being made, albeit at a relatively low level. There are a number of more positive factors that are contributing to this.

Euro interest rates are lower now than they have even been

The latest European Central Bank’s interest rate cut to 1.00% is the lowest level since the single currency’s creation. It is possible that the rate will be cut still further later in the year. Whilst it is likely that not all of this will be passed on to lenders, any lowering of consumer rates is positive and will help stimulate the markets to some extent.In Mallorca we are seeing buyers are taking 50% loans so they have a hedge against any further significant currency fluctuations. Braver investors are seeking higher percentage Euro loans on the basis that Sterling will improve against the Euro and therefore, paying off the loan and converting the bulk of their Sterling at a later date will be to their advantage.Reflecting this there was a small increase in the number of new mortgages granted in March although the number is still significantly down on last year.Continue opportunities for property purchases at very low asking prices for MallorcaThis is the most important factor. Buyers in the Mallorca property market at present tend to be either professional investors, or private individuals who realise a) that there are some very good deals to be had in the current market and, b) that to delay looking for a property in the hope that conditions will move even more in their favour might mean missing out on a great opportunity that is available in the market right now.We have written several times on this subject and you can read previous articles ono the subject via the links listed on this page of the Mallorca Property Partners website. Overall our prediction remains that average property prices in Mallorca will drop further through to the end of this year, possibly continuing into the first half of 2010. We do not however think this drop will be as high as in other parts of Spain (predicted to be 10% overall this year and 12% next year by analysts at BBVA – one of Spain’s leading banks). The fact that there are active buyers in the market in Mallorca sets the region apart from most. And there are plenty of other solid reasons to set Mallorca apart from other parts of mainland Spain, the other Spanish islands, and most other international property markets too (see the “Green shoots” article referenced above).But once again the over-riding observation is to not rely too much on market data and statistical analyses. This is because of the considerable variance in actual selling prices above and below the average prices in this unusual market environment. The reason for this is that the seller’s circumstance is a more powerful factor than in a “normal” market environment and this is not directly related to the usual determinants of the value of a property.There are, therefore, some exceptional deals being done at price levels that are unlikely to be improved upon regardless of where average prices go to. To illustrate, see this selection of properties in Mallorca that have  either been reduced in price or listed at very low asking prices.If you are reading this because you might be interested in buying a property in Mallorca, our advice is to monitor opportunities on an ongoing basis. You might see the ideal property right now and be able to get it at an unbeatable price. It is not easy though to identify the best opportunities, as not all owners are dropping the asking price but still may negotiate significantly when it comes to an offer.Your best approach would be to brief us at MPP to use our experience and unrivalled contact base to look out for the best Mallorca property opportunities for you. Read more about what Mallorca Property Partners offer.

Singapore experienced Asia’s highest residential property price increases during 2006, with 9.5% real (inflation-adjusted) house price rises.

There were also 9.3% real house price increases in South Korea, and 9.1% real house price increases in the Philippines. These were seen in the Global Property Guide House Price Indices, the biggest collection of residential property price indices.

Singapore’s strong 2006 GDP growth rate, at 7.9%, pushed up demand for Singapore property. The Urban Redevelopment Authority (URA) private residential property price index rose by 10% (9.5% in real terms) in 2006.

South Korea also saw a strong rebound in property prices, despite continued efforts by the government to depress the market. The Kookmin Bank’s house price index rose 11.6% in Dec. 2006 (9.3% in real terms) from a year earlier.

In the Philippines, strong economic growth and reduced inflation contributed to the continued recovery of the real estate sector. In addition, demand from Overseas Filipino Workers (OFWs) and dual citizens has been strong, pushing prices up. Luxury condominium prices in the Philippines rose 15% (9% in real terms) in 2006, following an 11% nominal price rise in 2005, according to Colliers International.Japan and Hong Kong are laggards

Japan’s residential property market continued to fall in 2006, despite repeated attempts by the media to portray the market as rallying. Nevertheless, the residential urban land price index registered a smaller fall in 2006 (-2.8%) compared to last year (-4.7%).

Hong Kong’s property market turned negative (-2.13%) in 2006, after impressive gains in 2004 (27%) and 2005 (8%). Higher interest rates in the US, mirrored directly in Hong Kong, were a major cause of the downturn.

Taiwan’s messy political crisis seems to have frozen residential prices, with 0% appreciation during 2006. In real terms, Taiwan experienced a decline in house prices during 2006 (-1.7%). During three years prior to the second quarter of 2006, Taiwan’s Sinyi house price index rose 17%.

In Malaysia, house prices did not to keep pace with inflation. Malaysian house prices today are at the same level as 1995, in real terms.

Thailand saw the end of ending its strong post-Asian crisis property market recovery, as the political crisis impacted the economy. House prices moved up just 1.9% in 2006 (-2.4% in real terms), after 2005’s price increase of 7% (1.5% in real terms), and 2004’s rise of 9% (6% in real terms).

Indonesia managed to reduce 4Q 2006 inflation to 6% from 16% during the first three quarters. With the house price index registering a 6.6% increase in 2006; house prices rose by 0.5% in real terms.The 2007 elections – risks abound

2007 is an election year in Korea, Taiwan, and the Philippines, and political uncertainty is likely to increase. There will also be elections in Japan and Hong Kong, but they are unlikely to have much impact on the real estate market. In Thailand, uncertainty will increase if elections are not called. The Philippines. A victory for President Arroyo’s party in the upcoming Congressional elections would be positive for real estate. Election years in the Philippines bring money inflows, but also increased uncertainty. But if Arroyo wins enough seats in Congress she will push constitutional change, removing constitutional limits on foreign ownership of real estate and companies – good for real estate. South Korea. The economic interventionism of left-of-center President Roh Moo-hyun has been damaging for Korea’s housing market. His support is crumbling, and a less interventionist president may be elected in December. But even if the opposition Grand National Party wins, excessive government intervention in the housing market has a very long history in South Korea.Taiwan. Parliamentary elections at end-2007 will provide a strong lead on whether the Kuomintang (KMT) can regain control of the presidency in 2008 from the Democratic Progressive Party (DPP). President Chen Shui-bian’s two terms have largely been spent on keeping him from being ousted. Significant banking and tax reforms have been held hostage by politics. Japan. Half of the seats in the upper house will be contested in July. Seats held by the Liberal Democratic Party (LDP) may be reduced, risking its reform agenda. These seats were won with the help of former prime minister and popular reformist Junichiro Koizumi. Hong Kong. Donald Tsang is up for re-election as chief executive where elections are still largely ceremonial and Beijing’s anointment is the only significant factor. Pro-democracy campaigners are hoping and pushing for reforms to full democracy and Mr. Tsang’s failure to push for constitutional reforms in 2005 means that this will be his last term.Thailand. The sooner elections are called, and Thailand is returned to democracy, the better it will be for the property market and the economy as a whole. The fate of Thailand’s property market hinges on the junta. If the junta prolongs military rule, the market will suffer.

The Global Property Guide sees inflation risks to be minimal in Asia in 2006. But other risks threaten the real estate market, particularly the re-emergence of bird flu in several countries, Indonesia in particular.

Not only were the numbers up from February, 2009, there was also a 1.1 percent increase over March of last year, right around the time the economy began it’s decline.

Pending home sales are not yet actual sales, just signed contracts awaiting loan approval. They are still considered a very good gauge to the overall health of the housing market. The positive numbers could be thought of as an anomaly in an otherwise severely depressed economy. The next report will give more of an idea if the housing market is gaining momentum. Two months of positive growth will be good news for the overall health of the U.S. Economy. Three months of positive numbers will not bear well for those sitting on the sidelines waiting for property values to contract yet further. That will show that the population is out buying in force, and when that happens the best deals will be snatched up quickly.

Once the real estate market gets some momentum behind it, there is a good chance that home prices and interest rates will rise quickly. The theory behind such a prediction is simple supply and demand. Right now there is a glut of housing on the market,. Builders are holding to much inventory for to long, and what they have been able to sell has been at deep discounts, often below costs. People wanting or needing to sell homes are sometimes forced to take much less than the homes value as recently as last year. Then there are the foreclosures the banks are trying to get rid of. All of this makes for an over burdened market ready to explode.

Prices and interest rates are at almost historic lows. When the housing bubble and the failing economy met, it left many people hurting while opening up a once in a lifetime opportunity for buying or investing in residential real estate properties. Brokers and agents around the country are reporting an increase in activity and sales. The people are coming out and looking again.

Going into and at the height of the real estate bubble buying rundown properties and fixing them up to re-sell at a profit was popular. Many people missed the opportunity, but it is back again. There are decent properties out there that can be picked up at substantially lower prices than what they are worth. There has been evidence of this already. It’s an easy way for aspiring entrepreneur to make substantial profits with little investment.

The biggest incentives in history are being offered by the Government. An up to $8000 tax credit is available for qualifying first time home buyers. This program alone is expected to bring 30000 new home buyers to the market. That could very well be the beginning of the end for bargain hunters.

The time to buy if one is intending is now. Many analysts and economists both are optimistic about the economic recovery happening soon, if not already in it’s early stages. Those that wait to long for better deals may get left behind as we leave the contraction behind and start working on a new and prosperous future.

Joel Weihe

Nearly one in four are now priced out of the UK property market altogether, so it’s no surprise that they are now considering alternatives that will give them that all-important first step without succumbing to the UK’s sky- high property prices. With talk of 100 percent mortgages, shared ownership schemes and 75-year loan terms, UK home buyers are looking to the Bulgarian property market to make their first home purchase.

The average UK house price is now in excess of £200,000 as quoted by the BBC and recent interest rate rises coupled with a bleak economic outlook have not aided the situation. The burden of a lifetime of mortgage payments is weighing heavily on young homebuyers’ minds. Added to this, a survey with National Savings and Investments showed that a massive 84% of 18-24 year olds believe that buying their first home abroad is more viable than buying it in the UK. The National Savings and Investments survey revealed that in London, 36% of first time buyers would consider buying abroad as an alternative to purchasing in London. .

Research from Quest Bulgaria Magazine indicated that the Bulgarian property market is still buoyant and looks set to grow even further. It seems there is no better time than now to invest in Balkan bricks and mortar. Despite this positive forecast, many first time buyers remain reluctant to actually put down roots in Bulgaria. This could be due to preconceptions about the country which include, fear of the language barrier, its reputation for being a haven for senior citizens and worries about employment prospects.

UK salaries are disproportionately low when compared to the rising house prices, so it is not unusual for British twenty somethings to opt for a life back home with Mum and Dad instead of venturing onto the property ladder. The high deposit and crippling mortgage of UK property ownership need not elude potential homeowners. A Bulgarian bolt-hole can provide a rental income and potentially build equity if the Balkan market performs according to expectation. The buy-to-let market is on the up in Bulgaria, which coupled with the country’s very low taxation of just 10% shows there is a huge financial incentive to make your first property purchase there.

Bulgarian property offers enormously good value for money and house prices are currently forecast to rise on average by 15% this year. If you’re banking on a quick return, look for up-and-coming areas in the process of regeneration. Similarly, improvements to transport links are usually a sure sign that an area is going up in the world. Low cost airlines tend to have a ripple effect on the surrounding areas of any airport they add to their ever-expanding routes.More and more people are making the most of long weekends and cheap flights for mini breaks overseas. Nowadays, it is normal for people to take frequent trips to second homes instead of traditional, single longer vacations. This broadens the scope for Bulgarian property investment with some regions enjoying both long summers and ski-friendly winter seasons.

Regions with the best transport links offer a compromise between buying for pure investment and full-scale relocation. It is financially possible to live and work between two countries. Working in London and then spending your weekends in Sofia or Varna is now perfectly possible. It’s worth bearing in mind that, under the UK’s flexible working legislation, parents with a child under the age of six and certain adult carers have a legal right to request flexible working hours. Even if you do not fall in this category, it might be worth asking your employer if you can work flexibly. An employer may only refuse a request from an eligible employee should there be recognised business grounds for doing so. With high-speed internet connections available in Bulgaria, employees can take the opportunity to work from their Balkan home.

The UK is awash with TV shows on property renovation, taking these elements and applying them to a Bulgarian home could pay dividends too. Many will agree that the UK property market is saturated with developers making renovation bargains thin on the ground. By comparison, Bulgaria is packed with potentially lucrative properties, from ready-made holiday apartments to serious building projects.

Review

“Nolo Press approaches housing issues with the consumer – and costs – in mind. Selling Your House in a Tough Market is another helpful offering from a company that goes out of its way to provide timely, accurate material. –TOM KELLY, Nationally syndicated columnist and author”Nolo Press approaches housing issues with the consumer – and costs – in mind. Selling Your House in a Tough Market is another helpful offering from a company that goes out of its way to provide timely, accurate material. (TOM KELLY, Nationally syndicated columnist and author. )This is an incredibly timely and informative book. The tips from experts make it easy to find and take real action. Everything you need to know from how to prepare for and start the process, to how to work with an agent, to selling strategies, and finally to sealing the deal. A real one-stop guide.In this day when sellers are struggling to sell homes that are no longer appropriate for them, along comes a book that t (more…)