Challenges during crisis

The global real estate markets are now challenged. A quick look at the past year shows price collapses, almost zero demand, issues with mortgages and slowdowns at some places that have been considered quite strong until recently. Forbes.com offers an international travel through the global real estate markets and a brief retrospection of the past events.  

The first signs of the upcoming crisis started in the USA. Yet, the Golden state of

California
turned into a hot spot for residential property transactions. According to Radar Logic Sacramento, San Diego, Los Angeles and San Francisco are leaders in transaction volume growth, considering the fact sales in Sacramento rose by stunning 75% for the past year. However, it is important to mention that some of the properties sold are mortgage-backed. The Radar Logic’s research shows that real estate properties in Sacramento have fallen down by 33% for 2008.  
The picture is not that rosy in the
South and North states
where the property market is still weak and transactions are slowing down. Prices in Orlando, Florida have dropped down by 20% since the start of 2008, in Miami - by 17%, and in Tampa – by 20%, the National Association of Real Estate Brokers reports. A similar market can be found to the north. Prices in the stable city of Charlotte, North Carolina, have declined by 4.2% since 2008.
The same symptoms can be found on the

East Coast
Residential prices in some bigger cities have significantly declined. The registered annual drop in Boston is 10%, and transaction volumes, being the main indicator for NY properties, dived by 19%, Radar Logic reported. The market state in smaller towns, such as Buffalo and Albany, remained quite different – home prices rose by 3% and 0.5% respectively.
The signs of the downturn spread rapidly on the Old Continent as well. On the whole, the market that’s been mostly affected by the crunch is 

Great Britain
Its biggest market, London, is suffering the same disease as New York. The residences here are not immune to the downturn. According to Knight Frank, London property prices fell by 13% since March. In recent months, prime property prices have dropped down by 3.9%.  
And while the country is more or less of a closed market, we have seen strong interest in

Continental Europe
Eyes have turned to Spain expecting price corrections. After registering a 250% price growth from 1997 to 2005, the country’s popularity significantly grew. But behind these figures we find foreign investors and speculators, who had invested heavily in real estate properties, especially in Malaga, which is now offering more than 54,000 new holiday properties. Real estate prices in Germany and France have not witnessed a similar rise so the correction is not too striking. While France is not officially in recession, Germany is now having hard times. Nevertheless, both countries are quite vulnerable because of the rising unemployment rate. 
The developing markets in  

Eastern Europe
have seen the crisis in a positiveway, although they floated on the waves of rising economy only several months. Slovakia, for example, registered a 10% growth, while Bulgaria - 7%. According to the global consultants from Night Frank, both property markets saw prices grow by 32% and 31% respectively in 2008. But economic expansion was what stopped their progress as prices gradually started to decline. Thus, in 2007, Latvia saw its real estate prices rise by 20%. Later, however, properties depreciated by 24%.

South America
Sales of second homes have leadto Argentina and Brazil’s economic growth. After years of growth, the Brazil economy has sharply declined, which was prompted from the depreciation of the Brazil currency. This explains the fact that the crashing global economy has pushed property buyers aside, commented Judice & Araujo’s prime real estate brokers in Rio de Janeiro.  
Knight Frank is also registering some positive changes in property values in some countries in  

Africa.
The consultant company says prices inJohannesburg and Cape Town rose by 3.8% in 2008. But growth is accompanied by a number of concomitant issues. According to the National Bureau of Economic Research, inflation equals to almost 10% meaning that the true value of real estate properties has not increased. The Central Bank of South Korea has increased interest rates six times (thus restricting the prospect of receiving a loan) since June as a way of handling inflation. And this is really bad news for the real estate property market.  
Bad news, slowdown or lack of development – these are the words that describe the market in

China and Japan.
Japan is popular for its inability to support consumer spending. After the market’s downturn in the beginning of the 90s, there has been no price appreciation and still no consumption. Japan’s Central Bank has cut interest rates to 0.3% so that to stimulate the credit market. Nevertheless, this has made no effect on the Japanese market which registered a 0.7% decline, say Knight Frank. China’s Hong Kong is now into recession - a negative sign of the state in the local market.  
But the world has some positive challenges to offer. They concern the

Australian real estate market
Last year, property prices in Sydney went up by 3%, Australia Property Monitors reported. Now the greatest challenge for Australia is the decline in global consumer spending and its negative impact on this export-driven economy. The most common interest rates in Australia are relatively high – 5.2%, although the government has some intentions to reduce it.