The statistical property is a line that covers everything, but…

31 May, 2010 No Comments

If we read regularly, the media (regardless of whether specialized financial press), the general newspapers and blogs specializing in real estate, or we come to look at the prices in specialized portals, we realize that data given by the Ministry of Housing of Spain does not correspond much with reality.

Even from the association of developers Asprima of Madrid, is being asked to have official statistics on the evolution of the real price of housing sales. It calls for more transparency, and that the figures published are creating confusion out (Expansion 01/03/2010) within the Spanish real estate sector, on issues such as:

1 – % of low housing prices in Spain.

According to the information collected from property agents and developers, the ones who are actually negotiating prices in a sale, prices are falling down much more than what the Ministry publish.

This is a recession time, and sales prices are not really the ones the owner asks for, but in general their are being advertised at a higher price of the current market conditions, waiting for the buyer to negotiate the price, but the idea is there is still a percent for the developer (in case of new homes and who mistakenly bought the land at a high price) or the speculator (who bought the house expensive) in order to be covered from their previous mistakes.

The problem caused is that the buyer considers the price is still too high (the demand is withdrawn) and plans to delete his idea of buying a home.

This does not happen in other countries, to encourage demand, the selling price of houses are updated to the current real estate market value, and also be willing to make a small additional reduction.

Of course, this action of the promoters / owners of homes for sale, makes statistics no to be according with every day happenings in the real estate market.

The same happened in the time that prices rose rapidly, which was also not properly reflected in the statistics. Therefore, neither the value which uses the Ministry nor the price at which the owner intends to sell are reliable sources for official statistics.

2 – The actual number of homes sold.

Moreover, if we talk about actual sales taking place, we see that its statistical accounting is not in accordance with reality. New homes sold by developers in many cases it is a sale made on plans, but not registered in that year, alhough they are no longer on sale in the market, because they are considered to have been already sold.

Another important characteristic is a modality that is currently done enough: rental house with purchase option. These houses could be seen in some cases sold and thus accounted for, although they constitute a deferred sale in time.

Future real estate bubble in China?

21 May, 2010 No Comments

This year 2010 is very complicated for the Chinese economy, due to issues related to the appreciation of the Yuan, inflation and the growth of house prices , as discussed in the article on BBC news.

To stop the current speculation in the Chinese real estate sector, the Government has taken several measures to avoid the rise in housing prices, including:

• Increase the first payment from buyers of second homes to a minimum of 50%.
• The State Council called on banks to stop lending money to buyers of residential properties for third properties and do not grant loans to buyers who do not show evidence of at least 1 year of residence in China.
• Increase the provision of land for development.
• Strengthen controls on financing real estate companies.
• Instruct the developers to not monopolize properties in order to drive up prices (Beijing has been limited to a purchase of new construction homes to its residents).

Given these measures to suppress the increases in housing prices,some investors are rushing to sell their property while prices remain high. Many real estate speculators who invested in Shanghai and Beijing began to sell their homes since March 2010, so that the number of properties for sale increased significantly.

Today, although China’s society is very conservative, have also introduced measures to regulate the granting of mortgages, because the new generation, western-minded, have no problem asking credit cards and mortgages (previous generations requested financial support to the family and there was not much demand for banking products).

Another issue that has helped the growth of demand and therefore prices to remain higher, is that Chinese society in matters of family is very traditional and many marriages can not be held if the couple has no home ownership . This has led to the problem of the relationship between salaries and house prices in major cities is increasing. The solution given by government is to create public housing parks to facilitate access to citizens with lower purchasing power.