Thread: Property Price Crash Spreads East

http://www.nytimes.com/2008/04/14/business/worldbusiness/14real.html?_r=3&hp&oref=slogin&oref=slogin&oref=s login

Housing Woes in U.S. Spread Around Globe

DUBLIN — The collapse of the housing bubble in the United States is mutating into a global phenomenon, with real estate prices swooning from the Irish countryside and the Spanish coast to Baltic seaports and even parts of northern India.

This synchronized global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes but jobs as well.

In Ireland, Spain, Britain and elsewhere, housing markets that soared over the last decade are falling back to earth. Property analysts predict that some countries, like this one, will face an even more wrenching adjustment than that of the United States, including the possibility that the downturn could become a wholesale collapse.

To some extent, the world’s problems are a result of American contagion. As home financing and credit tightens in response to the crisis that began in the subprime mortgage market, analysts worry that other countries could suffer the mortgage defaults and foreclosures that have afflicted California, Florida and other states.

Citing the reverberations of the American housing bust and credit squeeze, the International Monetary Fund last Wednesday cut its forecast for global economic growth this year and warned that the malaise could extend into 2009.

“The problems in the U.S. are being transmitted to Europe,” said Michael Ball, professor of urban and property economics at the University of Reading in Britain, who studies housing prices. “What’s happening now is an awful lot more grief than we expected.”

For countries like Ireland, where prices were even more inflated than in the United States, it has been a painful education, as homeowners learn the American vocabulary of misery.

“We know we’re already in negative equity,” said Emma Linnane, a 31-year-old university administrator.

She bought a cozy, one-bedroom apartment in the Dublin suburbs with her fiancé, Paul Colgan, in May 2006, at the peak of the market. They paid $575,000 — at least $100,000 more than it would fetch today. “I sometimes get shivers thinking about it,” Ms. Linnane said, “but I’ll let the reality hit me when I go to sell it.”

That reality is spreading. Once-sizzling housing markets in Eastern Europe and the Baltic states are cooling rapidly, as nervous Western Europeans stop buying investment properties in Warsaw, Tallinn, Estonia and other real estate Klondikes.

Further east, in India and southern China, prices are no longer surging. With stock markets down sharply after reaching heady levels, people do not have as much cash to buy property.

Sales of apartments in Hong Kong, a normally hyperactive market, have slowed recently, with prices for mass-market flats starting to drop.

In New Delhi and other parts of northern India, prices have fallen 20 percent over the last year. Sanjay Dutt, an executive director in the Mumbai office of Cushman & Wakefield, the real estate firm, describes it as an erosion of confidence.

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nice cut n paste.

^Yes, with a link to the source document. Is there a problem with that?

^ didnt say there was, was thanking you for beign such a useful and productive member of this forum. that all.

still no real drop in bangkok prices though. yet.

^Won't be long...

^ agreed.

The UK and Euro have been in negative equity on homes before (late 80s early 90s), but convenient to blame this on the US in the current climate. Sure, there is a domino effect, but if the markets/lenders/bank regulators over there were on their toes, they should have seen it coming and put measures in place. Ah, but it's so easy to blame the US for any woes these days.

I agree Jet. The knock on effect from the US is real, but the European banks and regulators should have tightened up on mortgage lending a long time ago. They only have themselves to blame.

^ and ^^The current debate in the UK is whether there is a comparable amount of sub-prime in the domestic mortgage market. The US may have been first, but may not be the worst.

Today, the Royal Institution of Chartered Surveyors' report shows Confidence in the UK housing market fell in March to its lowest point since records began 30 years ago!

http://newsvote.bbc.co.uk/1/hi/business/7346564.stm

some bigshot told me that property prices wouldnot fall in thailand as real estate is special to Thais, i.e. not a normal asset class for investment subject to supply and demand equilibrium, but something almost sacred and a very personal passion for all home owners.

i told him that people in nearly every country say precisely the same thing and a more convincing reason would be that there is no transparency with prices paid, so people can shove all sorts of silly valuations on real estate and sit and wait.

Will be interesting to see if house prices do slump in los, but farmland has seperate dynamics what with world food shortages coming into play and surging rice and grain prices, so should put farmland prices up?!

Originally Posted by pompeybloke

Will be interesting to see if house prices do slump in los, but farmland has seperate dynamics what with world food shortages coming into play and surging rice and grain prices, so should put farmland prices up?!

Farmland in UK is 14% up YOY, compared to house prices 4% down (after inflation). I would expect farmland to increase in value worldwide in direct proportion to higher prices of crops. LoS has no fundamental differences to deviate from World averages.

Originally Posted by bkkandrew

Farmland in UK is 14% up YOY, compared to house prices 4% down (after inflation). I would expect farmland to increase in value worldwide in direct proportion to higher prices of crops. LoS has no fundamental differences to deviate from World averages.

My wife just purchased 2 rai in Si Sa Khet for 100,000 bht. this is equal to $4,300 per acre.. I just sold farmland in California for $1,500 per acre something aint right here