Own A House - real estate market news

The cost price of construction of square meter of habitation in Moscow does not exceed $1,5 thousand.
According to real estate experts the cost price of square meter of skyscrapers makes almost $1,5 thousand. In older houses the cost price of one square meter does not exceed $800.
Experts prove that five years ago the cost price of construction in Moscow was approximately twice below.
Thus the cost price includes only charges on human resources and building materials, without taking into account requisitions and recoils which considerably make cost of the constructed building higher.
The expert also has noted that, despite of greater charges on “recoils”, profitability of construction in Moscow is very high and averages from 400 %.

In 20 largest cities USA prices for houses have fallen to record size. The S&P/Case-Shiller index, which shows the state in the real estate market in the American mega cities, has fallen in January, 2008 to 10,7 % in comparison with the similar period of the last year.
In experts’ opinion, it shows that hypothec crisis has gone deep into the USA.
In December, 2007, S&P/Case-Shiller has fallen to 9 %. The index, which is being monthly calculated, has reached the maximum in the second quarter 2006 and then it has started to decrease.
During the last year the quantity of transactions on sale of houses-new buildings in the USA has reduced on 26 %. It is the record-breaking low parameter since 1963. Concerning the secondary real estate market, in September, 2007, the sale here has fallen on 19 % in comparison with September, 2006 - up to a minimum established in 1999.
In savings and loan associations experts’ opinion, the prices for real estate in both segments will continue to decrease - on 15 % on primary, and on 13 % on secondary the market.

The British - masters of marketing, they always the first come on the new market and promote it. The script is simple. At the initial stage, when the habitation and land is very cheap somewhere far away, the most brave investors buy up actives. Then goes massed promotion in the mass-media with the description of local life, unappreciated real estate and the promise of further growth. Frequently game is built around any important event in a history of the given country: for example, joining the EU. At this stage begin mass purchases of the real estate by Englishmen: they are sent in “cottage-tours,” though the British frequently buy without going to a place of the future purchase, during real estate exhibitions. At the third stage the business involves investors from other countries. The prices really grow even more. The Englishmen, who have bought actives some years prior to it, can easy fix super-profit and start to develop the new country with cheap real estate. Now, for example, everything begins in Vietnam.

The situation when a lot of middle class representatives appear owners of real estate abroad is fundamentally new. On the one hand people have a “wardrobe” of the real estate. English pensioners are closest to realization of this principle: one third of the year they can spend in the apartment in London, a third - in a small house in Southern Africa, and the last third - in Brazil. On the other hand, formation of built-up areas, which high-grade exist only a part of the year, is at early stages of development and viability of this model is not clear.

The main buyers of real estate abroad - Englishmen: more than 5 million people have already got houses or apartments outside the island. The main cause of such transactions is in big difference in the prices for real estate between expensive Britain and other countries. For young Englishmen real estate abroad is the first step in «a staircase of real estate» as on the native land they can buy nothing. Middle-aged and old people frequently sell their houses and move to other countries to get rid of mortgage credits - 37 % of Englishmen are ready to leave Britain for this reason.

Recently the British have started to practice selling the big house, and buying for this money a smaller one. The difference is invested in the second habitation abroad, trips and entertainments.
The British foreign real estate investment Internet-portal Homesgofast.com has studied inquiries of 170 thousand visitors and has found out, that Dubai, Brazil, Egypt, the USA (the western part of New York state and Florida) and Turkey are the most popular among potential buyers.

English pensioners like Spain, Australia or New Zealand (became fashionable due to fantastic landscapes in the movie Lord of the Rings). Developers have at once responded the demand and started to build for pensioners special inhabited complexes «60 +».

One of the most scale, amazing and paradoxical town-planning phenomena on the planet is the project of of Dubai’s site development. ”Persian Gulf is on the front line of impetuous modernization with the most active growth of urbanistic formations. The Gulf, which has started the development owing to the oil, passes a phase hyper-development, preparing for an inevitable exhaustion of oil stocks”, - writes in the research “Gulf” well-known Dutch architect Rem Kolhaas.

In Dubai it is staked on mass construction of outstanding buildings. New wonders of the world grow there in abundance: the only in the world seven-star hotel “Sail”, a huge mountain-skiing slope in a shopping center in the middle of the desert, the highest building of the world, fantastic artificial islands-palm trees, the house as the Arab, Rotating Building, the house from Porshe designers and so forth. Scales of construction amaze. Today over 30 thousand hoisting cranes are concentrated on a small site of a land (a coastal line of only 50 km). Moreover, every fourth high-rise crane of the world works here. Volumes of investments into the real estate are estimated in hundreds billions dollars annually.

An interesting detail - the planet’s largest building sites today are in not liberal countries. They are China with the communist party, in Dubai with sheikh Mohammed Al-Makhmut, who possesses all ground area and the control over the three largest developers of the country - Nakheel, Emaar and Dubai World.

Change of building site geography – is one more tendency of the world real estate market. - New sites of the building boom - Asia and countries of the Persian Gulf. In the urbanized zones of coastal China and Southern Asia, according to the forecasts, in twenty years time will concentrate half of the planet’s population.

Europe, where population does not grow and building supply is high, cannot brag of global projects. Moreover, volumes of house-building in some countries fall. For instance, in Western Germany the volume of house-building has reduced more than twice for ten years, and in East Germany - more than in three times. At that the prime cost is rather high, that also doesn’t encourage mega-projects: according to the research of architectural magazine Wonderland, one square meter in a private house costs in the Western Europe 1430 Euros, in the East Europe - 780 Euros.

The main huge building site of the world is China. In a marvelous way Chinese manage to build 1 sq. m of habitation for a person in one year. In Shanghai a housing stock has practically trebled for ten years. In Chinese People’s Republic in resent years the population of many towns has grown up to one million.
It is interesting, that China not only invests huge money in housing construction (2,1 billion dollars in 2006), but also skillfully controls the market. So, when in 2005 the market in Shanghai became superheated, authorities managed to cut off speculators from the market and prevent growth of the bubble.

These figures do not look fatal, but it is necessary to recall, that real estate market is rather conservative and can react to a crisis situation rather slowly.
Therefore other parameters can be more evident: sales volumes, amount of building permits, amount of loaned credits, and amount of bankruptcies of house owners. So, according to the Bank of Spain, last July the amount of building permits has decreased by 38 % for the 12-month’s period that can be interpreted as reaction of he builders to big overstocking of the market with ready houses.

What will be with real estate markets of Europe and America? If it had happened twenty years ago, it would be possible to say like «overheated - cool down». The market would have run for some time into recession, the prices would have been a little lowered, and then the market would have recovered. However in conditions of strong connectivity of the markets and increased dependence on financial sector, it is very difficult to make the forecast.
Besides, simultaneously bubbles have swelled in other markets - energy carriers, metals, foodstuffs. It can speak about the similar reasons for rise in prices, and consequently, that question of the future of real estate market depend substantially now not on behavior of local players, but on the policy of financial authorities in leading countries (Federal Reserve System and Central Banks).