Rio turns slums into homes

Photo credit: Jeff Belmonte

Rio is turning its slums into homes, giving land titles to informal residents in the city's shanty towns.

Brazil's real estate has been increasingly popular among overseas investors in recent months, with land values climbing across the country. But while domestic and foreign demand has strengthened in the last year, unofficial shacks on the edges of Brazil's cities have remained the only affordable housing option for some families.

As the country prepares for the upcoming Olympics, Brazil's authorities have tried to tackle violence and crime in these slums, officially bringing the settlements from the outskirts and into society. The latest part of that process is local officials issuing land titles to locals, turning their land into a legal possession that can be used as lending collateral as well as sold on the formal property market.

"Now this is safe, secure," one 70 year old resident told The Associated Press. "No one takes it away from [our family]."

These steps follow similar moves from countries, such as Cuba, where major changes to the housing market has seen residents given the right to buy and sell real estate for the first time in history.

In Rio, 10,000 properties will be officially given to the families occupying them this year, with 37,000 projected by 2016. But with almost 5 million people living in slums without a title to their home, the authorities have a long way to go.

Meanwhile, the locals are facing increasing competition from eager investors. The Associated Press reports of one slum, Vidigal, which spans "two of Rio's most expensive zip codes". Now, a luxury hotel is under construction in the well-located shantytown community, while rent there has quadrupled since 2008.

The mismatch between overseas and domestic property markets has always thrown up strong contrasts, especially as buyers continue to look to Brazil as an alternative destination to the troubled real estate of the eurozone.

Indeed, reports last week predicted that property prices across Rio would correct themselves this year after a period of growth, with the city's real estate dropping in value by up to 30 per cent - a shift expected to encourage a new wave of foreign investors.

As Brazil's property market takes positive strides for its long-discriminated slums, the question is: will they sell up to the highest bidder?

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North-South divide gets bigger as London prices climb

The North-South divide is getting bigger in the UK, according to Hometrack's new report, which shows prices increasing London while they decreased in seven out of 10 regions across the country.

The capital's property values climbed by 0.6 per cent in May, leading to overall UK property recording an increase of 0.2 per cent, but prices remained flat in the West and East Midlands as well as the South West. East Anglia and the South East posted increased of 0.2 per cent, but the North East, North West, Wales and Yorkshire & Humberside regions saw declines of 0.1 per cent.

Richard Donnell, director of research at Hometrack, commented: "The growth in the number of new sales being agreed slowed significantly in May, but that mirrors the pattern seen in previous years with overall levels of demand and sales agreed slowing after Easter".

Source: Independent

Bulgarian property suffers world’s sixth-biggest fall in prices

Bulgarian property suffered the world's sixth-biggest fall in prices in the first three months of 2012.

After severe downturns at the end of 2011, with prices dropping by 9.65 per cent year-on-year, Bulgaria's property market showed "positive changes in momentum" in the first quarter of the year, according to a new survey by Global Property Guide, as decreases slowed. But these "are so feeble... they hardly signal a recovery", the report adds.

Reviewing market figures for 36 housing markets across Europe, Global Property Guide's survey notes that 24 countries saw prices fall, while values increased in only 10 markets.

Athens in Greece and Warsaw in Poland led the declines, with prices falling by 11.68 per cent and 10.94 per cent respectively. Spain and the Netherlands also saw values fall by 9 per cent and 6.05 per cent, while annual dips were recorded in Finland (2.05 per cent), Turkey (2.32 per cent), Sweden (5.34 per cent) and Riga in Latvia (5.83 per cent).

However, some markets did see prices climb. Estonia's home values surged by 9.13 per cent compared to the first three months of 2011, while Austrian property prices rose by 8.24 per cent. Other increases also occurred in Switzerland (5.49 per cent), Norway (5.43 per cent), Russia (3.86 per cent) and Iceland (2.25 per cent).

Source: Novinite.com

Cyprus luxury market stays strong

Figures surrounding the Cyrus property market have been plummeting downwards for some time, but amid the country's economic crisis, a chink of positive light has appeared: luxury real estate on the island has actually resisted the recession quite well.

Knight Frank's Cyprus Residential Prime Market Report 2012 demand has stayed relatively strong for high-end property with prices in the most popular second-home destinations falling by 20 per cent since the market peak, compared to third-choice locations, where values have dropped by 40 per cent.

"Unlike the domestic housing market and the core second-home market, demand for the very top-end of the market has remained strong over the past couple of years," reads the report.

Demand for prime developments is driven exclusively by international investment, with the UK accounting for most activity in sectors below €500,000. Russia and other European buyers fuel the €500k-2m market, while Russia and other CIS countries dominate the €2m+ market.

 "Estimates vary, but against a backdrop of falling prices across the country, values across prime markets have generally remained flat over the past two year," adds the report. "However, at some of the very top developments unit prices have risen by around 10% on average."

Stamp duty holiday sees first time buyers splash out in Scotland

First time buyers splashed out in Scotland as the stamp duty holiday came to an end, according to the Council of Mortgage Lenders in Scotland. Driven by the discount's expiry, buyers purchased more expensive property than usual in the first quarter of 2012, with 38 per cent picking up property valued between £125,000 and £250,000 - the highest proportion since records began in 2005.

Due to lower house prices in Scotland, around 35 per cent of first-time buyers usually buy property in these bands compared to 50 per cent in the UK as a whole. Properties under £125,000 were still the most popular option in Scotland in the first quarter but, at 58 per cent of first-time buyers buying within this band, this is the lowest since records began.

There were 4,000 loans, worth £380 million, taken out by first-time buyers in Scotland in the first quarter. Despite the stimulus provided by the end of the stamp duty concession, this was a 9 per cent fall in the number of loans and a 5 per cent fall in the value compared to the previous quarter, but a rise of 21 per cent by number and 31 per cent by value compared to the first quarter of 2011. First-time buyers accounted for 42 per cent of the house purchase loans in Scotland, the highest since 2001 and the same proportion in the UK as a whole.

Scottish first-time buyers typically borrowed 80 per cent of their property's value in the first quarter of the year, the same as the UK overall. The proportion of income spent on mortgage interest payments by first-time buyers increased to 11.4 per cent in the first quarter from 11 per cent in the previous quarter but was still lower than the proportion paid by first-time buyers across the UK (12.7 per cent).

Lending to home movers followed a similar pattern to first-time buyers. The 5,500 loans taken out, worth £720 million, was a fall of 24 per cent (25 per cent by value) from the last quarter, but a rise of 8 per cent (11 per cent by value) compared to the first quarter of 2011.

Overall, Scotland experienced a fall in lending for house purchase, as in the UK, in the first quarter of 2012. 9,500 loans were taken out, worth £1.1 billion, down from 11,600, worth £1.4 billion, in the last three months of 2011, but up from 8,400, worth £930 million, in the three months to March 2011. 

Remortgage lending also dropped in the first quarter in Scotland and UK-wide. There were 7,800 loans, worth £750 million, down from 9,000, worth £880 million in the last quarter of 2011 and 8,900, worth £850 million, in the same period last year.

Iain Malloch, chair of CML Scotland, commented: "Despite the fall in lending in Scotland in the first quarter of the year, the end of the stamp duty concession clearly had an effect on the market, mainly with the increase in the proportion of higher priced properties bought by first-time buyers during this period. However, if Scotland follows the trend expected across the UK, there is likely to be a further drop in activity over the coming months.

"The CML in Scotland looks forward to working with the Scottish government and other stakeholders throughout the rest of 2012 to ensure the housing market is open for business across all tenures."