International Property News

2009 good time to buy property: broker
Ed Logue
January 2, 2009

Australians could find 2009 an opportune time to buy property, but they should not expect a swift recovery in housing prices. Loan Market Group executive director John Kolenda says low interest rates and subdued property prices combined with government initiatives have made entering the property market easier, particularly for first home buyers. Australian policy makers have provided stimulatory measures in the second half of 2008 to boost the domestic economy.

Since September, the Reserve Bank of Australia (RBA) has cut the cash rate by three percentage points to a seven-year-low of 4.25 per cent. In October, the federal government doubled the first home owners grant to $14,000 and increased it to $21,000 for buying or building a new home. Debt futures markets are pricing the cash rate to be as low as 2.5 per cent in June, while many market economists predict at least another one percentage point cut in total by the central bank. "Despite the global economic uncertainty, the conditions in Australia for those seeking to enter the property market are ideal," Mr Kolenda said. "Mortgage holders in the coming year are likely to benefit from the lowest variable interest rates ever offered in Australia as the cash rate could fall to 2.5 per cent." House prices have been sluggish across the eight capital cities in the past two quarters, down 1.8 per cent in the September quarter, the Australian Bureau of Statistics' (ABS) said. This followed a 0.2 per cent drop in the June quarter. CommSec chief economist Craig James said property prices would rise moderately this year due to an undersupply of housing. "Overall, national housing prices are tipped to grow by three to five per cent over 2009 with major variations across the regions," Mr James said. Mr Kolenda said the rise in the grant had stimulated interest in the lower half of the housing market "These concessions will continue for the first half of 2009, while we also expect to see home mortgage rates fall further, encouraging a variety of buyers, including Australians returning from overseas," he said. The peak home building body, the Housing Industry Association (HIA), forecasted a recovery in the property market in the second half of 2009. "We will be into 2009, possibly some months through, before

Property brokers cutting costs amid fears of large scale job losses

Property brokers and investment bankers in Europe are tightening their belts as major job losses are predicted a year after the credit crunch started. With much of the European real estate market on its knees, high-flying real estate dealers are leaving their favourite tables at expensive London restaurants vacant, amid fears that thousands could lose their jobs. The situation is particularly bad in the UK where the latest figures show that property prices have dropped back to 2006 levels and still falling. UK real estate agencies are shutting at 100 per week. 'Property is a cyclical business and contraction will be inevitable as firms look to be more streamlined,' warned UK Property Federation Chief Executive Liz Peace.

Rumours abound that some of the biggest employers in real estate are bracing for a phase of redundancies which could cost up to 5,000 property professionals their liveliehoods. According to data from Cushman & Wakefield, European property trading volumes have slumped 63% year-on-year to €25.6 billion, leaving many brokers in Spain, Ireland, Germany and France fearing redundancy.

Analysts believe that a flurry of corporate takeovers has left the big players with too many support staff playing piggy-back on fewer high fee-earning brokers. Although few will admit large scale redundancies are imminent, the latest figures show sinking second quarter profits at major players like Jones Lang LaSalle and CB Richard Ellis. 'Property services firms are all having to adapt to more difficult market conditions,' said Alastair Hughes, head of EMEA at Jones Lang LaSalle. London-listed global consultancy Savills has admitted it has embarked on a cost-cutting programme. CBRE, the world's largest property consultancy, has also said it is looking at cutting costs and that it had shed a modest number of jobs in business areas hardest hit by the market downturn. Although not everyone in the property sector is doing badly. Hospitality sector giant Whitbread has allocated £100m to develop hotels and restaurants on sites previously earmarked for residential or office development. It will open nine new Premier Inn hotels and five new restaurants by 2010/2011 in London, Preston, Doncaster, Glasgow, Kendall in the Lake District, Newport in Shropshire, Trowbridge in Wiltshire and Rugeley in Staffordshire.