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| Boom and bust: how property markets are faring around the world | Boom and bust: how property markets are faring around the world |
| (1 day later) | |
| UK | UK |
| As savers queued outside Northern Rock to withdraw their cash in September 2007, Britain's housing market began to crumble. But a decade of blistering increases, which took the average home from £68,777 in 1997 to £199,766 in late 2007, ended with a whimper. Prices slipped over 2008 and hit a low of £157,767 in summer 2009. Today the national average has climbed back a little, to £162,932, according to Halifax. | As savers queued outside Northern Rock to withdraw their cash in September 2007, Britain's housing market began to crumble. But a decade of blistering increases, which took the average home from £68,777 in 1997 to £199,766 in late 2007, ended with a whimper. Prices slipped over 2008 and hit a low of £157,767 in summer 2009. Today the national average has climbed back a little, to £162,932, according to Halifax. |
| But regional variations have been extraordinary. In Northern Ireland, the implosion was devastating. Houses that typically sold for £230,000 in 2007 now fetch just £100,000, a 57% collapse. In mainland Britain, Hartlepool in the north-east has seen the biggest slide, with the average home now selling for £74,000 compared with £113,000 at the peak. Meanwhile many buyers of new-build luxury flats in provincial cities remain deep in negative equity. | But regional variations have been extraordinary. In Northern Ireland, the implosion was devastating. Houses that typically sold for £230,000 in 2007 now fetch just £100,000, a 57% collapse. In mainland Britain, Hartlepool in the north-east has seen the biggest slide, with the average home now selling for £74,000 compared with £113,000 at the peak. Meanwhile many buyers of new-build luxury flats in provincial cities remain deep in negative equity. |
| Then there's London. The contrast with the rest of the UK has never been more stark. Prices in some outer boroughs are below their peak, but in wealthier central districts, the crash never happened. In Kensington and Chelsea, the average home now costs £1.08m, up 13% during 2012 and £330,000 ahead of 2007. | Then there's London. The contrast with the rest of the UK has never been more stark. Prices in some outer boroughs are below their peak, but in wealthier central districts, the crash never happened. In Kensington and Chelsea, the average home now costs £1.08m, up 13% during 2012 and £330,000 ahead of 2007. |
| Meanwhile, tenants have never had it so bad. Young adults and families unable to afford huge the huge deposits demanded by lenders have turned to the private rental market, where rents have climbed even as average pay has stagnated. | Meanwhile, tenants have never had it so bad. Young adults and families unable to afford huge the huge deposits demanded by lenders have turned to the private rental market, where rents have climbed even as average pay has stagnated. |
| Experts think the market will stay flat across Britain, even in central London, in 2013. There are signs that the funding for lending scheme is feeding through to lower interest for first-time buyers, but the Council of Mortgage Lenders expects total transactions to edge up from 930,000 to 950,000 in 2013, but slip back again in 2014. Patrick Collinson | Experts think the market will stay flat across Britain, even in central London, in 2013. There are signs that the funding for lending scheme is feeding through to lower interest for first-time buyers, but the Council of Mortgage Lenders expects total transactions to edge up from 930,000 to 950,000 in 2013, but slip back again in 2014. Patrick Collinson |
| Spain | Spain |
| Five years after Spain's residential property bubble burst, prices are still tumbling and have much further to go, with 1m properties unsold. Spain's Mortgage Association reports a fall of 27% from the peak so far, with 10% of that last year. The Economist says prices will not bounce until a further 20% is wiped off the value of Spanish homes. | Five years after Spain's residential property bubble burst, prices are still tumbling and have much further to go, with 1m properties unsold. Spain's Mortgage Association reports a fall of 27% from the peak so far, with 10% of that last year. The Economist says prices will not bounce until a further 20% is wiped off the value of Spanish homes. |
| Uncertainty is added by the arrival of a new player, the "bad bank", Sareb, set up by the government to take toxic real estate assets of banks that have had eurozone bailouts – to the tune of €40bn. The assets are often new developments and land belonging to developers who failed to repay loans. | Uncertainty is added by the arrival of a new player, the "bad bank", Sareb, set up by the government to take toxic real estate assets of banks that have had eurozone bailouts – to the tune of €40bn. The assets are often new developments and land belonging to developers who failed to repay loans. |
| Sareb has not said how many properties it holds, nor how it plans to sell them over a 10-year period. But the properties will number in the tens of thousands, if not more. Estimates are that it will eventually mop up €65bn worth of property – making it Europe's biggest single real estate portfolio and twice the size of Ireland's bad bank, Nama. | Sareb has not said how many properties it holds, nor how it plans to sell them over a 10-year period. But the properties will number in the tens of thousands, if not more. Estimates are that it will eventually mop up €65bn worth of property – making it Europe's biggest single real estate portfolio and twice the size of Ireland's bad bank, Nama. |
| Spanish banks' profits fell as they sold off or wrote down property last year, but developers still owe them €270bn – with a third of that considered toxic. Experts say the unsold houses should take three to four years to sell – so it will be a long time before the residential construction industry starts creating jobs. Giles Tremlett | Spanish banks' profits fell as they sold off or wrote down property last year, but developers still owe them €270bn – with a third of that considered toxic. Experts say the unsold houses should take three to four years to sell – so it will be a long time before the residential construction industry starts creating jobs. Giles Tremlett |
| Dubai | Dubai |
| Back in the good old days, "investors" in Dubai could make 10% profit on a property deals in a matter of minutes. At big property fairs staged in the glitzy emirate in early 2008, people would queue to buy apartments and villas "off plan" – from developers' architectural drawings – long before construction work started. Smart operators would get there early, write a cheque for the property, then sell the receipt to another "investor" at the back of the queue for a 10% mark-up. | Back in the good old days, "investors" in Dubai could make 10% profit on a property deals in a matter of minutes. At big property fairs staged in the glitzy emirate in early 2008, people would queue to buy apartments and villas "off plan" – from developers' architectural drawings – long before construction work started. Smart operators would get there early, write a cheque for the property, then sell the receipt to another "investor" at the back of the queue for a 10% mark-up. |
| That was the kind of scam – then entirely legal – that fuelled the Dubai property bubble from 2002 (when foreigners were first allowed to buy there). It burst spectacularly in autumn 2008 as investment cash dried up, the nascent mortgage market collapsed, and the "Dubai dream" evaporated for many. | That was the kind of scam – then entirely legal – that fuelled the Dubai property bubble from 2002 (when foreigners were first allowed to buy there). It burst spectacularly in autumn 2008 as investment cash dried up, the nascent mortgage market collapsed, and the "Dubai dream" evaporated for many. |
| Property prices plummeted by 60% in a few months, and "iconic waterside developments" were mothballed in their hundreds. Their skeletons, topped with stationary cranes, lined the emirate's skyline. Some $75bn-worth of projects were shelved, bankers estimated in 2009. | Property prices plummeted by 60% in a few months, and "iconic waterside developments" were mothballed in their hundreds. Their skeletons, topped with stationary cranes, lined the emirate's skyline. Some $75bn-worth of projects were shelved, bankers estimated in 2009. |
| One developer, government-owned Nakheel, responsible for the spectacular Palm Jumeirah and other man-made islands, almost went bust with $16bn of debt. Nakheel is still paying that off, but there are now signs the Dubai property market is coming back to life. | One developer, government-owned Nakheel, responsible for the spectacular Palm Jumeirah and other man-made islands, almost went bust with $16bn of debt. Nakheel is still paying that off, but there are now signs the Dubai property market is coming back to life. |
| Estate agent Cluttons said recently that prices were heading back towards the 2008 peaks, especially in areas such as Dubai Marina and Arabian Ranches, where foreigners are allowed to buy. A six-bedroom penthouse apartment, valued 12 months ago at $17m, was recently priced at $25m. William Butler | Estate agent Cluttons said recently that prices were heading back towards the 2008 peaks, especially in areas such as Dubai Marina and Arabian Ranches, where foreigners are allowed to buy. A six-bedroom penthouse apartment, valued 12 months ago at $17m, was recently priced at $25m. William Butler |
| Ireland | Ireland |
| Ireland is emerging at a snail's pace from one of the worst property downturns in the postwar developed world. | Ireland is emerging at a snail's pace from one of the worst property downturns in the postwar developed world. |
| Overall, the average cost of a house in Ireland is now down to €207,000 (£175,000), which is 50% below the market rate at the height of the republic's property boom in 2006. However there appeared to be a slight upward trend in house prices in Dublin towards the final quarter of 2012, according to Daft.ie, Ireland's biggest property website. | Overall, the average cost of a house in Ireland is now down to €207,000 (£175,000), which is 50% below the market rate at the height of the republic's property boom in 2006. However there appeared to be a slight upward trend in house prices in Dublin towards the final quarter of 2012, according to Daft.ie, Ireland's biggest property website. |
| Dublin house prices climbed 1.6%, the first increase in six years, and the overall rate of market decline has been slowing. | Dublin house prices climbed 1.6%, the first increase in six years, and the overall rate of market decline has been slowing. |
| A closer breakdown of Daft.ie's figures also shows disparities between houses in the Irish capital and the average home in other parts of Ireland. A three-bedroom house in Dublin, south of the river Liffey, will cost around €252,950 while a similar house in Cork City is €148,424. And even compared with Cork, attractive Galway City in the west of Ireland is a far cheaper place to buy a similar property. The price of a three-bed in the "capital" of the ancient province of Connaught is estimated at around €132,060. | A closer breakdown of Daft.ie's figures also shows disparities between houses in the Irish capital and the average home in other parts of Ireland. A three-bedroom house in Dublin, south of the river Liffey, will cost around €252,950 while a similar house in Cork City is €148,424. And even compared with Cork, attractive Galway City in the west of Ireland is a far cheaper place to buy a similar property. The price of a three-bed in the "capital" of the ancient province of Connaught is estimated at around €132,060. |
| On an upbeat note, the length of time it takes to sell a property is speeding up – a sign that the market is starting to recover. Now four in 10 properties find a buyer within four months, compared with just three in 10 a year ago. Henry McDonald | On an upbeat note, the length of time it takes to sell a property is speeding up – a sign that the market is starting to recover. Now four in 10 properties find a buyer within four months, compared with just three in 10 a year ago. Henry McDonald |
| Iceland | Iceland |
| After a sharp decline since the economic bubble burst four and a half years ago, house prices in Iceland have been rising for the last couple of years. Today the average price of a residential property in Reykjavík is about 260,000 krónur (£1,300) per square metre. | After a sharp decline since the economic bubble burst four and a half years ago, house prices in Iceland have been rising for the last couple of years. Today the average price of a residential property in Reykjavík is about 260,000 krónur (£1,300) per square metre. |
| From 2000 to 2008, house prices in Iceland doubled, with most of that increase coming after 2004. But when the Icelandic economy came crashing down in October 2008, so did the property market. From peak to trough the fall in real (inflation-adjusted) house prices was 34%, and more than 27% of households were left with mortgages bigger than the value of their homes. | From 2000 to 2008, house prices in Iceland doubled, with most of that increase coming after 2004. But when the Icelandic economy came crashing down in October 2008, so did the property market. From peak to trough the fall in real (inflation-adjusted) house prices was 34%, and more than 27% of households were left with mortgages bigger than the value of their homes. |
| The scale of the negative equity problem was partly due to the two types of mortgages that were on offer – inflation-indexed mortgages and low-rate loans indexed to foreign currencies ("FX loans"). After the crash, the amount borrowed on indexed loans rose because of inflation (the relevant index rose by 37.5%) and FX loan debt soared when the króna fell by more than 40%. | The scale of the negative equity problem was partly due to the two types of mortgages that were on offer – inflation-indexed mortgages and low-rate loans indexed to foreign currencies ("FX loans"). After the crash, the amount borrowed on indexed loans rose because of inflation (the relevant index rose by 37.5%) and FX loan debt soared when the króna fell by more than 40%. |
| Since the crash, there have been debt-restructuring measures that reduced mortgage debt to 110% of property values, and a special interest rebate. In addition, most of the FX loans have been deemed illegal and recalculated. | Since the crash, there have been debt-restructuring measures that reduced mortgage debt to 110% of property values, and a special interest rebate. In addition, most of the FX loans have been deemed illegal and recalculated. |
| As a result, real house prices are now back to where they were in 2004-05 and are forecast to rise by some 5% this year and next. This recovery is due partly to capital controls that limit the investment opportunities available and push cash into the property sector. There is also huge demand, as construction has been very limited since 2008. Thórdur Snær Júlíusson | As a result, real house prices are now back to where they were in 2004-05 and are forecast to rise by some 5% this year and next. This recovery is due partly to capital controls that limit the investment opportunities available and push cash into the property sector. There is also huge demand, as construction has been very limited since 2008. Thórdur Snær Júlíusson |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| HSBC | HSBC |
| Nationwide | Nationwide |
| Provided by London & Country for the Guardian |