Will 2011 Be The Turning Point For The Global Property Market?

[Michelle Alden]

After almost 15 years of rising property prices in the vast majority of global property markets – and by as much as 300% in some markets - the last half of the decade was a rollercoaster ride for the global property industry. The sub-prime crisis emerged in the US in 2006, and rocked the global financial system. Shortly afterwards, the effect on the global property market became evident as property prices declined by an average of around 17% across the globe over the next two years.

Of course, there are wide differences in the performances of local property markets, some of which are still below their earlier peaks, most notably the US and some European countries. In addition, property prices have, in the last few months, showed signs of decline again. This can, to some extent, be ascribed to the fact that the stimulus provided by aggressive rate cutting has been absorbed by markets, and further rate cuts have not been possible, given the low interest rate levels. The ongoing difficulty of accessing finance also continues to constrain any substantial recovery.

The question, then, is will 2011 be the turning point for the global property market? “Given the realities of the last few years, it is unlikely that 2011 will be a ‘turning point’ in the sense that we will return to the pre-2006 scenario where the majority of global property markets produce strong house price growth. While it can be expected that, overall, the global housing market will deliver positive growth in 2011, double-digit growth rates are unlikely, except in a few exceptional cases. Instead, the slow but steady recovery evident since 2009 is likely to continue at a gradual pace and the bounce in property prices evident in 2009 and 2010, on the back of now-forgotten government interventions, will continue to slow.

[UK Mortgage Broker]

I think 2011 will be the year. Already seeing mortgage lenders returning and where there's lending there's available money.

[brian]

If anything, 2011 as when the market became more exhausted.

As on our news section, first time buyers are at an all time low, cash buyers are now 40% of the UK market, and property values have oustripped earnings way beyond the normal trend line.

While most people fixate on 0.5% property price rises - currently driven by foreign investment in London while the rest of the country languishes, don't forget that with inflation at 4%+, property values are being inflated away.