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The world’s housing markets are showing signs of recovery, according to the latest survey of world-wide house price indices prepared by the Global Property Guide.

Seven countries have emerged from the house price slump (see below). However, most countries suffered sharp house price falls during the year to end-Q2 2009, so that the general situation remains negative. The Global Property Guide uses price-changes after inflation, giving a more realistic picture than the (more upbeat) nominal figures usually preferred by real estate agents. After experiencing declines in 2008, house prices in China, Portugal, Australia, New Zealand, France, Sweden and Hong Kong rebounded during the latest reported quarter, Q2 2009.

 

Seven countries are in recoveryIn Shanghai, China, house prices were up 1.96% during the year to end-Q2 2009. These gains occurred entirely during Q2 2009, when Shanghai’s house prices rose 2.09%. China’s house prices started falling in the last quarter of 2008, but a strong increase in government spending revived both the housing market and the economy, which has seen 7.1% GDP growth during the first half of 2009. Chinese  property prices are now widely expected to increase further.

 

Average house prices in the Algarve, Portugal, at EUR1,429 per square metre, were up by 2% during Q2 2009.  House prices in Portugal as a whole rose 1.01% during Q2, and were down only 0.43% on the year to end-Q2 2009, compared to -7.24% during the year to end-Q2 2008.  New construction orders in Portugal increased 12.3% during Q2 2009.

 

Australia and New Zealand saw house price increases of 3.73% and 3.31% respectively during Q2 2009. All regional capital cities in Australia registered quarterly house price increases, ranging from 2% to 5%. However, over the year to Q2 2009, there was a price decline of 2.80% in Australia. In New Zealand, the annual change is still negative at -3.07% in the year to end-Q2 2009. But in July 2009, New Zealand  had the first yearly house price increase since 2008.

 

After falling for the last five quarters, house prices in France were up by 3.31% during Q2 2009, thanks to government subsidies. In Sweden, house prices were up by 3.16% during Q2 2009. Hong Kong’s house prices increased by an average of 8.9% during Q2 2009.

 

The US housing market is strongerThe Case-Shiller house price index was up 0.35% during Q2 2009, from a decline 6.46% during the previous quarter, Q1 2009. Over the year to end-Q2 2009, house prices were down by 13.96%, an improvement from 18.51% fall year-on-year to Q1 2009.

 

The FHFA’s purchase-only index was however down by 1.74% during Q2 2009, somewhat worse than the 0.04% drop during Q1 2009, so the signals in the US are mixed.Over the year ending in the second quarter of 2009, seasonally-adjusted prices fell 5.03%.This was a lesser fall than in the year to end-Q1 (-9.16%) and than in the year to end Q4 2008 (-9.69%) (all figures inflation-adjusted).

 

Some countries avoided the crunchIsrael’s housing market has continued to sail through the global recession. The average price of houses rose 8.40% year-on-year to end-Q2 2009. But the quarterly increase in Q2 2009 was down to 1.02%, a drop from 5.52% in Q1 2009.

 

Switzerland saw an increase of 4.90% over the year to end-Q2 2009. However, house prices barely increased during Q2 2009.

 

The momentum signals improvement A key indicator of improvement is the market’s momentum, i.e., the number of countries that did better this year, than during the previous year.  Nine countries improved their year-on-year performance to end Q2-2009, compared with the previous year.   In contrast during the year to end-Q1 2009, only six countries did better than the previous year.

 

Many countries are still sufferingThe Latvian housing market continues its extraordinary decline. Riga, the capital city, saw the average price of standard-type apartments drop 60.81% (inflation-adjusted) during the year to end-1H 2009. Prices dropped 26.75% during Q2 2009.  Demand for houses and apartments has been affected by high interest rates, which in June 2009 stood at 17.72% for credits to households.  Residential construction has been dismal since 2008, but in Q2 2009, the value of housing construction plunged 71.6% in comparison to the previous quarter.  Latvia’s overall economy shrank 18% y-o-y to Q1 2009, and its recession is predicted to continue until 2010.

 

The house price index for Dubai, UAE, fell 49.9% during the year to end-Q2 2009.  But quarterly data indicates that Dubai’s downward house price spiral is moderating. House prices fell 8.92% in Q2 2009, much less than the 42% drop in Q1 2009.

Double digit year-on-year declines were also experienced in Bulgaria, Singapore, Iceland, UK, Japan, Denmark and South Africa. Most recent quarter declines in these countries range from 2% to 10%.

 

Nearing recovery?The International Monetary Fund has declared that global recovery has started. The three big economies of Japan, France and Germany have recently exited from recession. The emerging economies of Asia have revived, with China leading the pack. Whether this recovery will be sustained is the big question.

 

 

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Description:  The Global Property Guide is an on-line property research house.

 

Terms of Use: On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com. Sites and newspapers found not to be providing a link to us will be removed from our press list. 

 

Requests for Comments:Requests for comments are best made by telephone to 44-117 973 5492.

 

Publisher and Strategist:Matthew Montagu-Pollock

Phone: (+632) 867 4220

Cell: (+63) 917 321 7073Email: editor @ globalpropertyguide.com

 

Address: Global Property Guidehttp://www.globalpropertyguide.com  5F Electra House Building115-117 Esteban StreetLegaspi Village, Makati CityPhilippines 1229info @ globalpropertyguide.com

 

 

House prices have begun to fall in the Greater Riga area – a fall of 3.5% in the month of June 2007, following a fall 1% in May 2007, according to the leading Latvian real estate agent Latio. Prices have fallen “for the first time in history”, says Latio, which if not quite accurate, emphasizes the sense of shock.

These figures are consistent with recent warning signs. But they are all the more shocking in that year-on-year to Q1 2007, Latvia was Europe’s strongest performing housing market with house price rises of 44.23% during the year, according to Latvia’s Central Statistical Bureau.

The Global Property Guide (www.globalpropertyguide.com) believes these latest figures signal the end of the Great Baltic House Price Boom. Estonia started falling before Latvia, as is normal in the Baltics. We have long suggested that low rental returns in the Baltics mean that investors should be very cautious.

The decline of house prices also reflects several serious economic problems which have accumulated in Latvia:

• The current account deficit rose to 26.3% of GDP in 4Q 2006, from 15.2% a year earlier.

• Inflation was sharply up at 8.9% in April 2007, up from 6.5% last year, and 1.9% in 2002.

• Loans to residents grew 60.4% in the year to Q4 2006 (58.2% and 61.7% in the previous two years).

• Long-term interest rates are sharply up.

(See the Global Property Guide’s coverage of Latvia)

In February Standard & Poor’s (S&P) put on negative watch its rating in Latvia’s long-term forex-denominated liabilities, and then on 17 May lowered the rating from A- to BBB+. This brings Latvia back to the rating it held in 2002.

The Lats, pegged to the Euro since January 1, 2005, came under pressure in February in response to the S&P revision, and the Bank of Latvia had to intervene. The Euribor interest rate on Euro variable rate loans jumped to 10% in June 2007, from 5% this January. Obviously, this rise in interest rates has had a substantial effect. So too have government attempts to cool the market through the banking system. So too have recent legislative changes, e.g., the imposition of a 25% tax on personal income from real estate sold within a year of purchase. Painful adjustments needed

Till recently Latvia was Europe’s No1 house price performer. Now Latvia is in deflationary mode, with house prices falling and spending restrained.

Local players can be expected to adjust to the new realities, but with a delay, which can be expected to exaggerate the downturn. In June, 2007, 19 new housing projects were announced, after 15 projects in May, April, March, and January this year (February saw a spike in apartment project launches to 26). This means that by historical standards, a very large number of new apartment projects continues to come on to the market. Lower residential returns signal stop!

The price of good quality used apartments in prime locations in Central Riga ranges from €2,900 to €3,143 per square metre, according to the Global Property Guide (survey conducted 24 Nov 2006). Houses in similar locations are slightly cheaper, ranging from €2,521 to €2,700 per square metre.

These prices are high relative to Latvia’s GDP per capita, being on a par with Scandinavian countries.

In Riga, city centre average prices rose from around €1,264 per sq. m. in August 2004, to around €3,011 at end-2006 – a 138% increase in just over two years.

Meanwhile, in Riga average monthly rents have risen, but not nearly so much, from around €8.20 per sq. m. to around €12.64 per sq. m. – an increase of around 54%. Riga rental income returns (average for all sizes) have therefore fallen over the past two years, from around 7.85% to an average of 5.04% (the figures in the table above represent not average yields, but yields for apartments of 120 sq. m.).

These yields are not unreasonable. However in the particular situation of Latvia, such moderate yields, in the context of a continued very strong stream of new apartment offerings, and a sharp uptick in local long-term price of money, would make us very cautious.

Unless the economic cycle has disappeared from economics, it would seem to us that a cyclical peak has approached, and that for the moment investors should pause. Publisher and Strategist:

Matthew Montagu-Pollock

Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.comAddress:Global Property Guidehttp://www.globalpropertyguide.com

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.comDescription:

The Global Property Guide is an on-line property research house. Terms of Use:

On-line newspapers, magazines, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com.

Weighed down by the credit crunch and high inflation, the global house price boom has ended, according to the latest Global Property Guide survey of house price indicators.

Only 13 countries in which dwelling price indices are regularly published saw prices rise during the year to end Q1 2008, while 21 countries saw dwelling prices fall in real terms, i.e., after adjusting for inflation.

In most countries where house prices are not falling, they are clearly losing momentum.

The biggest house price fall was in Latvia (Riga), down -38.2% by May 2008 from a year earlier, after adjusting for inflation.

US prices also fell during the year to end of Q1, by anything from -4.2% to

-18.1%, after inflation, depending on which index is used.

In Europe, significant real house price falls took place during the year to end-Q1 2008 in Ireland (- 13.2%), Luxembourg (-5.8%), Portugal (-4.3%) and Malta (-4.9%).

UK house prices were only slightly down at end-Q1 from a year earlier, the house price crash having begun in earnest in early 2008. House prices fell during the first quarter by between – 0.7% to -2.1% (inflation-adjusted), depending on the index used.

In Japan, the housing market is now losing momentum once again. The urban land price index for 6 major cities was up only 4.1% year-on-year (y-o-y) to H1 2008 in nominal terms (2.9% after inflation), down from 7.8% over the same period in 2007 (7.9% after inflation). The national index for Japan fell by 0.7% y-o-y to H1 2008 (-1.9% after inflation).

Inflation woes

In nominal terms, 28 countries saw their housing prices rise during the year to end-Q1 2008, while only 6 saw prices fall.

However when property prices are adjusted for inflation, the picture looks entirely different. Skyrocketing oil, food and commodity prices have pushed inflation up around the world.

In Ukraine for instance, nominal house price growth was sharply down from 79.5% in the year to Q1 2007, to 18.2% in the year to Q1 2008. But when adjusted for inflation, property prices actually fell by -6.4% y-o-y.

In real terms, property prices fell y-o-y to end-Q1 2008 in Norway, Spain, Greece, South Korea, New Zealand, Indonesia, South Africa, Israel, Estonia and Lithuania, despite nominal price rises in all these countries.

House-price booms elsewhere

On the other hand, strong house prices increases were observed in a handful of emerging economies. Ahead of the pack was China (Shanghai), with an enormous 40.5% nominal house price surge during the year to the end of Q1 2008.

Other countries with impressive nominal house price increases y-o-y to end-Q1 2008 were Bulgaria (31.6% y-o-y), Hong Kong (31.1% y-o-y), and Singapore (29.8% y-o-y). Strong house price gains also took place in Cyprus, Australia and Taiwan.

Again, when adjusted for inflation, many of these price rises look much less impressive. The world’s top-performing housing market (after inflation) was not China or Hong Kong or Singapore, but Slovakia, where real house prices rose by 29.3%.

Causes of the downturn

There were arguably three main factors behind the end of the housing boom:

· After a very long boom, house prices had become stretched in many countries. The main indicator of this is the price/rent ratio, which compares the relationship between the buying price of a dwelling, with its rental price.

As the boom progressed, buying prices become high (in relation to rents and financing costs) in many countries, leading to decisions by some buyers to rent instead of buying. Mortgage-holders also came under extreme pressure as interest rates rose. A key lesson is the critical importance of monitoring price/rent ratios, to ensure that house prices valuations stay within reasonable limits. (Declaration of interest: The Global Property Guide produces comprehensive price/rent ratio estimates, globally).

· Inflationary pressures forced central banks to raise interest rates. This particularly impacted European countries where mortgage loans were primarily made on variable interest rate terms. Countries with heavily indebted households are also vulnerable when interest rates increase.

In developing countries, the overall economy (which strongly sways the mood of the housing market) is sometimes very sensitive to interest rate changes or to direct intervention by the monetary authorities. In some countries, mere threats of interest rate hikes are enough to shake the stock market and scare away foreign investors. But conversely, developing countries typically have smaller mortgage markets, reducing the impact on housing markets.

· Unsound regulatory and banking practices in the US and elsewhere led to over-lending by mortgage providers which, when these unsound loans began to go bad, caused a financial crisis. The bad news spread both by a panic contagion effect, and because many banks outside the US turned out to be more exposed than initially expected.

Prospects

Inflation remains an extremely challenging problem for the world’s central banks. In addition, the financial shocks to the world’s banking systems resulting from house price falls remain to be worked through (historically, most banking system collapses around the world have been caused by falling house prices).

Until these financial systems feel more confident that their problems are behind them, loan volumes are likely to fall. Therefore, it seems likely that the world’s house price momentum will continue to go down.

Description:

The Global Property Guide is an on-line property research house.

Terms of Use:

On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com Sites and newspapers found not to be providing a link to us will be removed from our press list.

Requests for Comments:

Requests for comments are best made by telephone to +(63) 917 321 7073. UK-based callers should telephone before lunchtime. Our local time is Hong Kong time, i.e., standard time + 8.00

Economics Team:

Prince Christian Cruz, Senior Economist Phone: (+632) 750 0560 Cell: (+63) 917 735 2228

Email: prince@globalpropertyguide.com

Publisher and Strategist:

Matthew Montagu-Pollock Phone: (+632) 867 4220 Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.com

Asian property markets, though still relatively unaffected by the credit crunch, will soon be affected by inflation and higher interest rates, warns the Global Property Guide, because of rising food, fuel and other commodity prices.

“Higher food, fuel and other commodity prices affect the housing market negatively in several ways,” says Prince Christian Cruz, senior economist at the Global Property Guide.

“At the micro level, households may postpone their decision to purchase a new house or spend on renovation if they anticipate higher prices. At the macro level, higher food and fuel prices push inflation up. Monetary authorities typically raise key interest rates to stem inflationary pressure,” Cruz explains.

Asian households are particularly vulnerable to recent rises in food prices. The price of rice, the staple in Asian diet, has risen by more than 90% during the last year to March 2008, according the UN Food and Agriculture Organisation (FAO).

The price of other food also has increased significantly. Wheat was up 160% in March 2008 on a year earlier; soy bean oil by 104%, corn by 37%, and sugar by 26%.

Food prices are a key component in the Consumer Price Index (CPI). Their proportional weight ranges from 28% in Singapore, to 33.2% in China, to almost 50% for urban workers in India. High food prices will persist until 2009, according to reports by the FAO, World Bank and the International Rice Research Institute.

The price of almost all commodities is increasing, not only food. The price of light sweet crude oil surged to US$115 a barrel in April 2008, up almost 80% from a year earlier. NYMEX crude oil has been above US$100 per barrel since March 2008.

Many Asian economies which have recently experienced residential real estate price surges such as China, Singapore, Philippines, Hong Kong and India (all of which registered double-digit house price increases in 2007) are under significant inflationary pressure (see table). Higher inflation and interest rates

Monetary authorities typically raise interest rates to combat inflation. They can also increase the cash reserve ratio (CRR) of banks or sell bonds or other financial instruments to reduce money supply.

The Reserve Bank of India (RBI) raised the cash reserve ratio by 50 basis points in two stages to mop excess liquidity and contain inflationary pressures. The CRR will be 7.75% effective April 26 and 8% by May 10, 2008.

The RBI, similar to other central banks in Asia, left key interest rates unchanged during the first half of April.

However, most analysts indicate the key rates might be hiked in May if inflation continues to be above the official targets

Fears of interest rate hikes cropped up in several Asian countries, particularly in Indonesia and China.

High interest rates affect housing markets in two ways:

1. By discouraging investment and consumption and causing the economy to slow, higher interest rates reduce people’s willingness to spend on housing

2. Higher interest rates discourage borrowing for housing loans.

“The situation is unfortunate because most Asian housing markets have not yet fully recovered from the effects of the 1997 Asian Financial Crisis,” Cruz notes.

“Even with strong house price gains in 2007, property prices in Asia are still below their pre-Asian Crisis peak levels. Despite 31% nominal rise in the over-all residential property price index, Singapore’s prices are still about 10% to 20% below their pre-Asian crisis peak level in real terms,” adds Cruz.

“In the Philippines, even with the 15% increase in condominium prices in 2007, it is still about 47% below its peak level in real terms,” he continues.

The housing markets most likely to be affected by monetary tightening seem to be China, India, Singapore, Philippines and Thailand, which have experienced the largest increases in inflation. Will Asia tango together?

“With global financial markets interconnected, the world’s economies tend to move together. The synchronicity was observed with the global housing boom – never before in recorded history did so many countries experience so much house price growth all at the same time,” Cruz notes.

“The housing market slowdown may also be synchronized,” he adds. “Inflationary pressures are likely to cause Asia’s central banks to raise interest rates, and slow their housing markets,” he says.

However convergence will not be universal. Where currencies are pegged to the US, housing markets are likely to diverge somewhat from the global adjustment.

Countries such as Hong Kong and the Gulf must follow US interest rates. Unless those countries re-peg their currencies, their central banks cannot raise interest rates. This may lead to higher inflation including in the housing market.

###Description:

The Global Property Guide is an on-line property research house. Terms of Use:

On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com. Sites and newspapers found not to be providing a link to us will be removed from our press list. Economics Team:

Prince Christian Cruz, Senior Economist

Phone: (+632) 750 0560

Cell: (+63) 917 735 2228

Email: prince@globalpropertyguide.comPublisher and Strategist:

Matthew Montagu-Pollock Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.comAddress: Global Property Guide

http://www.globalpropertyguide.com

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.com

The Caribbean, the playground of the rich and famous, has been getting more affordable. The depreciation of the US dollar against major currencies such as the British pound and the euro, has made Caribbean properties more attractive.

More affordable… but still not cheap! Property prices in more popular and developed islands can easily reach over one million US dollars for a house and lot near the beach.

In its latest survey of Caribbean property prices (March 2008), the Global Property Guide finds that in Bermuda, the average price of a three bedroom house and lot is around US$1.5 million.

In Grand Bahama, Bahamas, a similar property costs around US$1.4 million, according to Global Property Guide figures.

Property prices in highly-developed areas such as Bermuda and Bahamas exceed US$7,000 per sq. m.

Coastal properties in Barbados are also expensive, at around US$6,700 per sq. m. In the British Virgin Islands (BVI), the US Virgin Islands (USVI), real estate prices are around US$5,000 per sq. m. Sint Maarten also has expensive properties at around US$5,300 per sq. m.

Property prices in St. Kitts and Nevis, Puerto Rico, Martinique, St. Lucia and Antigua and Barbuda range from US$3,170 per sq. m. to US$4,500 per sq. m.

The cheapest Caribbean properties are found in Jamaica, Aruba and Dominican Republic, with prices ranging from US$1,300 per sq. m to US$1,500 per sq. m for houses near the beach.

For apartment buyers, Bermuda and Turks and Caicos Islands (TCI) are among the most expensive with prices at around US$5,000 to US$8,000 per sq. m. A two bedroom apartment costs around US$841,000 in Bermuda and US$670,000 in TCI.

Despite these high prices, Caribbean properties are now considerably cheaper than coastal properties in Mediterranean Europe. For instance, apartment prices in Barcelona are around US$10,000 per sq. m., more than twice the price of apartments in Bahamas or Cayman Islands.

Apartments in Jamaica and Aruba are among the least expensive in the Caribbean at around US$1,500 per sq. m. Apartments and condominiums are relatively new features in the Caribbean property market. Most of the properties are new and come complete with amenities.

###Description:

The Global Property Guide is an on-line property research house. Terms of Use:

On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com Sites and newspapers found not to be providing a link to us will be removed from our press list. Economics Team:

Prince Christian Cruz, Senior Economist

Phone: (+632) 750 0560

Cell: (+63) 917 735 2228

Email: prince@globalpropertyguide.comPublisher and Strategist:

Matthew Montagu-Pollock Phone: (+632) 867 4220 Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.comAddress:

Global Property Guide

http://www.globalpropertyguide.com

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.com

For sale by owner properties, or FSBO’s as they are commonly refereed, are some of the best places to look for new clients. If done correctly, they can provide a steady stream of interested and motivated new home purchasers. And at very little cost.

As a loan officer, your goal is to become the mortgage source that the FSBO seller will refer interested home buyers to, to get pre-qualified. And don’t forget that the FSBO seller may be looking for a new property as well—and with that a new loan. If you work the arrangement properly, you can get loans coming from both ways.

Here are some of the best places to locate FSBO’s in your area:

* The real estate classified section of your local newspaper.

* The Want Advertiser Magazine, and other small local buy/sell classified ad magazines. To give you a sense, a similar magazine is the Auto Trader, but there are ones out there that deal specifically with items and property.

* Drive around the neighborhoods you know are hot markets.

* Ask real estate referral partners such as realtors (they look for FSBO’s too, so may have seen one), appraisers (most FSBO’s will an appraisal report to justify a price), real estate attorneys (FSBO’s need contract work done), and others.

* Real estate section on ebay. A great resource!

* Warnock’s By Owner, an alerting service for real estate and mortgage professionals that tracks FSBO’s all over the country. You can visit their site at http://www.wbyowner.com

The most important thing to remember when dealing with FSBO’s is to identify to the prospect that you are NOT a real estate agent. You are there to help them weed out the unqualified prospects and save them time, money, and aggravation. These are the hot- buttons that will get your foot in the door, and a sale in your pocket.

In our next installment, we’ll look at how to best approach a FSBO prospect.

Good DeaUsing a realtor is one of the best ways to find best deals in great subdivisions such as Power Ranch. You can avail of the product for less than half its market value from the top. Properties are also sold in bundles. This is very appealing to investors today because they can avail of a house for a very low price and profit from it by selling them. Many thought that this endeavor is just for big time investors. However, small players in the market can also benefit from this. The trick is to know the system. It is also important that they know where to look for cheap properties in Power Ranch. Fortunately, finding these estates is not as difficult as it seems. Your initial solution would be filling your tank and driving around the neighborhood. With some luck, you will be able to spot properties on sale.Although driving around your car could work, it will cause you a lot of time, effort, and gasoline expenses. In order to find them, you should know where to look. Here are some tips to help you find these properties:The best places to look are lending organizations and banks. They have list of properties for foreclosure. It is also great because these institutions want to turn the tons of properties they have to cash. They are also very willing to work out a financial scheme so that interested buyers will be able to make the payment.You can also check business magazines and local newspapers. These materials post up to date listings of properties within the area that are available for sale. They also provide information about the property just in case you do not have enough time to check it out. Instead of looking for ads, you can create your own. You can post an ad on the above-mentioned instruments or post it on your website, blogs, and other media you can access. This way, those who want to sell their property can contact you. In addition, you can discuss prices with the homeowners directly. Ask those who are in the business. This is also the best way to get listings. Other investors have access to this information. They also have their own list. The challenge there is how you are going to ask them for listings of homes in Power Ranch. They will surely find you as their competitor. As you may know, most properties are set up for highest bids. In order to find the best deals, you have to know where to look. There are several ways to find these properties. You can exhaust all resources. However, do not get too excited with the low power sale prices. You may find yourself at the losing end once you check the house.It is important that in making the purchase you know what to expect. If there are certain damages on the property, be certain that its cost is not more than the amount you paid it for. It is not a worthy investment if you are in the losing end.Summary: In the real estate industry, Power Ranch properties have a growing market. If you are an interested investors, you have to learn the system and the process to maximize profitability. One of the things you should learn is where to look for these properties.

Rents have moved up much less than prices in China over the past few years. As a result, in 5 cities in China – Beijing, Chengdu, Guangzhou, Shanghai and Shenzhen – gross rental yields are now a modest 4.42%, based on a sample of high-end used apartments (www.globalpropertyguide.com).

Shanghai’s gross rental yields average only 3.74%. These are lowest gross rental yields in our China sample, but then Shanghai is the only city where apartment selling prices have apparently not dropped, according to the China Real Estate Index System (CREIS) and eHomeday. Shanghai residential asking prices average US$2,742 per square metre (sq. m.).

Beijing apartments earn slightly higher gross rental incomes of around 4.21%. These are the country’s most expensive apartments, with an average offer price of average US$2,977 per sq. m. for the high-end used apartments in our sample.

Chengdu also has rather low gross rental yields, an average of 3.88%. Chengdu apartments are the cheapest among the five cities, at US$1,060 per sq. m.

The highest rental yields are in Shenzhen, where apartments in our sample earn gross rental yields of 5.69%. The high-end used apartments in Shenzhen cost an average of US$ 1,780 per sq. m.

Guangzhou apartments earn mid-range gross rental yields of 5.41%. Our sample of Guangzhou apartment prices averages around US$1,577 per sq. m.

BACKGROUND IDEA – RENTAL YIELD

What does “gross rental yield” mean? It’s very similar to the Price / Earnings (P/E) ratio in the stock market. Just as share prices have a P/E range, house prices tend to fluctuate around a rental yield range, research shows.

The gross rental yield is the annual rental earnings / the value of the property.

So if the rent is US$5,000 and the property is worth US$100,000, the yield is 5%.

Our rule-of-thumb is that a gross rental yield of 6% to 7% means a housing market is ‘fairly valued’, though importantly, developing country housing markets usually have higher yields than developed, because of structural issues discouraging housing purchase such as the difficulty of getting mortgage finance.

Where yields (and rental costs) are comparatively low:

· People will prefer to rent, rather than to buy

· Investors are unlikely to ‘buy-to-let’

· Rents will tend rise faster than prices

Conclusion: No turnaround in China’s residential prices likely soon.

When the Chinese housing market was roaring ahead, rents moved up much less than prices. With the current market downturn, rents have dropped together with property prices (though slightly less). Gross rental yields now average a modest 4.42%.

Why are Chinese rental yields so low? Prices in China surged till September 2007, and then paused – and have not substantially dropped since then, according to CREIS, which uses a hedonic methodology (eHomeday arrives at closely similar results).

How far do gross rental yields need to rise in China? China’s gross rental yields of 4.42% are lower than would be expected in a developing economy. They are low, also, compared to other economies with similar income-per-capita.

We conclude that until one of two events occurs – more residential price falls, or substantial increases in rents – residential prices are unlikely to begin a sustained recovery in urban China.

The Chinese government has taken steps to support the market, such as temporarily suspending the business tax for residential property transfers, and encouraging cities to permit foreign purchases. China’s economy remains relatively strong, because of prompt government measures. Consumption spending is strong, restaurants are full, optimism remains high.

However, gross rental yields are still too low. Therefore, it is unlikely that there will be a convincing upturn in Chinese residential prices soon, the Global Property Guide believes.

Description:

The Global Property Guide is an on-line property research house.

Terms of Use:

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Santiago and Concepción are attractive for residential property investors, Viña Del Mar less so, says the Global Property Guide There are surprisingly large differences between returns on residential property in Chile’s main cities. The Global Property Guide (http://www.globalpropertyguide.com), the research site for residential property, released today the results of research into rentals in major cities of Chile. It revealed that: • Apartments in prime areas of Santiago have excellent average rental yields of 8.16%.• Apartments in the city of Viña Del Mar yield only half as much, on average, with gross rental yields of around 4.31% only.

The rental yield is the annual rental income on a property, as a percentage of today’s property purchase price. This is what a landlord can expect as return to his investment. The rental yield is one useful yardstick of whether property is over-valued or under-valued

The high yields on apartments in prime areas of Santiago – Las Condes, Providencia, and Vitacura – suggest that these Santiago areas make good residential property investments.Apartments in prime areas of Santiago cost on average US$ 98,520 for a 60 square meter apartment, according to the Global Property Guide’s research, versus US$ 87,480 for the same sized property in Viña Del Mar. However, 120 square meter apartments are more expensive in Viña Del Mar than in Santiago.

The result? Looking across the different sizes, prices in the two cities are more or less the same, on average.

Though apartments in Santiago and Viña del Mar cost around the same, per square meter, yet Santiago apartments produce twice as good rental returns – i.e., rents for the same sized apartment in Santiago are nearly twice as high. This means that Santiago is much more attractive as a residential investment.

In the southern city of Concepción, 120 square meter apartments have excellent gross rental yields of 9.04% – also, an excellent level of rental yields, making Concepción a very attractive investment.

Why consider rental yields? Some investors in residential property may ignore rental returns, being more concerned with capital gains.

Yet even they would do well to consider rental yields. The rental yield, or price/rent ratio, is similar to the price/earnings ratio in the stock market. As in the stock market, property investments with high rental yields tend to perform better, and have higher capital gains, in the long-term.

###Extensive Report – http://www.globalpropertyguide.com/Latin-America/Chile/Rental-YieldsDescription: The Global Property Guide is an on-line property research house. Terms of Use: On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com. Sites and newspapers found not to be providing a link to us will be removed from our press list. Publisher and Strategist:Matthew Montagu-PollockPhone: (+632) 867 4220Cell: (+63) 917 321 7073Email: editor@globalpropertyguide.comAddress: Global Property Guidehttp://www.globalpropertyguide.com 5F Electra House Building115-117 Esteban StreetLegaspi Village, Makati CityPhilippines 1229info@globalpropertyguide.com