Do not Blame Credit Crunch For House Price Falls

UK house price indicators show reductions in house prices with figures from Nationwide, Halifax, Hometrack, and Rightmove are showing falling prices. A common misconception is that the sub prime market and credit crunch is to blame for this downturn. A look under the surface will reveal that there is not one source to blame. One economics expert spreads new light on the plight of the UK housing market.

An article published in The Telegraph written by Roger Bootle managing director of Capital Economics and economic adviser to Deloitte shows a different picture to why house prices in the UK are falling.

Roger Bootle’ The credit crunch is not the root cause of what is going wrong in the housing market. The decline in new buyer inquiries began at least six months before the onset of the problems in wholesale markets - as did the downward move in completed sales. There are two fundamental causes of the housing market slump, one proximate and the other underlying. The proximate cause is interest rates. Official interest rates began to rise last August and they are up in total by 125 basis points. The second, fundamental reason is that property has become too expensive. What goes up too far must come down - and often too far as well. There are several indicators of housing market excess. My own favourite is the house price to earnings ratio, which currently stands in unheard-of territory at over six’

Further evidence of a housing slump is seen by results at recent auctions in the UK. Auctions are normally associated with sellers who are very keen top sell and price their properties accordingly.

“The auction results that we have been tracking suggest that a substantial gap has opened up between the price that buyers are willing to pay and that which sellers are expecting to achieve,” said Alan Castle, economist at Lehmans.

“Moreover, the data we have collected on asking price reductions suggest that the auction results may be flagging a broader trend towards lower house prices in some areas,” he added.

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Moneycorp at Overseas Property Exhibition

UK based Foreign exchange specialists Moneycorp are exhibiting at the UK industry overseas property exhibition OPPlive7 on the 4th and 5th December 2007 at ExCel London.

For over a quarter of a century, TTT Moneycorp has been providing a wide range of foreign exchange and related services for both private and corporate customers. The Company has become a significant influence throughout the UK foreign exchange industry.

Overseas property buyers have often left dealing with buying currency to last when buying property abroad. With constant market fluctuations, exchange rates can have a serious effect on both an investor’s capital and profit if they do not take the proper precautions. Foreign currency specialists can give protection against adverse currency movements. They also offer very competitive exchange rates.
Moneycorp are targeting overseas property professionals and have a VIP stand where agents Independent Financial Advisors can meet with them. Moneycorp state that they can help agents generate additional revenue for their business whilst saving clients money on their currency transfers.

OPPLive is the only business-to-business conference and exhibition in the UK aimed at the full spectrum of professionals working within the overseas property industry. Since the launch of the event in 2005 the exhibition visitor numbers have increased each year. Due to this continuing expansion of the event, ExCeL London for the first on the 4th and 5th December 07.

Foreign currency advice is available from Moneycorp as well as an instant online trading account

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US Dollar & Sterling Update

There was some good news for the Dollar on Monday night. Abu Dhabi Investment Authority, a sovereign wealth fund, announced that it would invest $7.5 billion in Citigroup, the troubled US financial conglomerate. The investment represents about 5 per cent of the group and is almost enough to cover the losses it has incurred since summer. The market's interpretation was that if ADIA had enough faith in the US financial sector to make such an investment then the Dollar may not be in such bad shape after all.

Investors did not fill their boots with Dollars but the boost to confidence was enough to allow the currency to navigate safely through a series of less than wonderful US economic data. Consumer confidence fell to its lowest level since Hurricane Katrina two years ago. House prices fell by 4.5 per cent in the three months to September. Durable goods orders were down, existing home sales were down and new home sales fell short of expectations.

The market has become inured to a rate cut by the Fed next week. The debate is simply whether the cut will be a quarter- or half-percentage-point.

A knock-on effect of this confidence boost was to increase investors' appetites for higher-yielding currencies, among which Sterling is numbered. Whether the Pound will be quite so high-yielding by Thursday afternoon is open to doubt. A clutch of Monetary Policy Committee members gave speeches and interviews that did absolutely nothing to clarify opinions on this week's MPC meeting.

The balance of opinion among analysts falls roughly 2:1 for the Thursday meeting with the majority expecting no change and a third looking for a rate cut. The MPC is not renowned for hanging around once it has selected a course of action. On the other hand, neither is it impetuous. Unless the committee believes that a slowing economy will take the pressure off inflation it will leave well alone. The control of inflation is after all its sole objective.

The month end probably accounted for the slackening of activity towards the end of last week. Expect liquidity to shrink further as we approach the end of the year. Banks and investors will try to keep positions as tidy as possible in order to be left holding the parcel when the music stops. It could mean greater short term volatility if they really pull the shutters down. Buyers of the Dollar can hope for a renewal of the Dollar's retreat but should protect themselves with a stop order.

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UAE Boom to Continue For Years

The real estate market in the United Arab Emirates, one of the hottest in the world, is set to continue until 2015 and beyond, according to new reports. Real estate and construction markets in the UAE are primarily focused on Dubai, which has been booming for several years, and the newer market of Abu Dhabi. Two recent studies by HSBC and Damac Capital International of Dubai both indicate that supply will not catch up to demand for a number of years, keeping the markets strong.

Middle East online news website Gulfnews.com reports that Dubai will continue to be a strong real estate market, while Abu Dhabi is set to take off. Rental yields in Abu Dhabi are expected to be in excess of 7% until at least 2013 and perhaps beyond.

According to Damac Capital's analysts Hany Seif and Pamela Chikhani, Dubai will remain a major Gulf real estate market for years to come. By some estimates, over the next 10 years both local and international real estate investors will pump in almost $300 billion into Dubai's real estate developments.

According to HSBC's real estate analysts, Walid Khalfallah and Majid Azza, Abu Dhabi is becoming a major regional real estate market. "The Abu Dhabi story is gaining credibility. After a slow start to the year, sales activity has picked up in the second half of 2007. The market remains extremely tight, with stronger-than-expected growth in rents [22 per cent] and prices [18 per cent]," they said in a recent report.

Abu Dhabi does not have the liberal international property laws that neighboring Dubai has yet, but things are improving there. The office market is particularly strong and vacancy rates are below 1%. With increased deregulation, Abu Dhabi will continue to gain ground on its more prominent neighbor. Both should see strong growth in the coming years.

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Exclusive Hawaii Resort is Expanding

Along the Kona Coast on the big island of Hawaii is the exclusive golf resort of Hokuli`a. This 1,550 acre development has recently opened up a new section of building lots to the general public. Previously, housing was only available to club members, but now there are plans to have as many as 600 units on the property Currently, though, there are only a limited number of sites are available.

This is truly a spectacular part of the world, with daytime temperatures in the 70s and 80s year round. The Kona Coast sits in the middle of the western coastline of Hawaii, the southernmost and largest of the islands. It is a microclimate that is sheltered from the winds and rains that hit the northern and eastern coasts of the island.

Each site is at least one acre, and prices start for around $3 million USD. There is a private, 18-hole Jack Nicklaus golf course, and all homeowners will have a membership in the golf club. The Nalu Kai, or ocean wave, homesites all have ocean views and are alongside the golf course.

Planned amenities will include a golf clubhouse, swimming pools, dining, spa facilities, tennis courts and a 140 acre waterside recreational park. There will be two swimming pools, one of which will be a 20,000 square foot lagoon-like recreational pool. The dining facilities will include an open-air, pavilion style restaurant and a beachfront bar.

Hokuli`a is 10 miles from the town of Kailua-Kona, the second largest community on the big island. It is 17 miles from Kona International Airport (KOA), the major airport on the island. There are direct and connecting flights here from all over the world, as well as inter-island flights to Honolulu, Maui and the smaller islands.

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