The truth in real estate prices finally?

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Thus, according to leaks to the press - that Challenges.fr was in fact the first to include the voices of my co-blogger Eric Treguier - National Council of Statistical Information (CNIS) has submitted to the Secretariat of 'State of Housing's report for "a better understanding of the market" real estate. Recall that the latter had replaced this summer as the Minister Christine Boutin was surprised - by the chairman of this committee, Bernard-Worms taking his post to see the weekly headline essentially their property files with one " prices rise again "and another," prices fall "... Hence the urgent request for clarification from the Secretary of State for Housing, also made in an interview with Eric even Tréguier Challenges in the magazine this time !

"There is no statistical tool to deal with extremely reliable goods prices," said Benoist had appeared. Of the 27 proposals supported by this document, the Government has selected four, including the idea of Internet portal that would identify the price per square meter last fifty sales of a given street. The Secretary of State for Housing and could launch an Internet portal that summarizes the latest statistics on housing. Specifically, consumers may access the price per square meter last half sales reached a street anywhere in France. Good. Note that this is indeed what is already - at least for the last current price if the 50 - Meilleursagents.com; a portal, launched in Paris Ile de France, has just opened in France the whole ... and over this magic number is available on a mobile phone just by taking a picture that good!
Returning to the departmental project, it would be the least of things that an institute of official statistics can provide, beside a macroeconomic index certainly essential but fairly useless for the particular information "micro" requested by each user pays Moreover, the Notary a fee when a sale just to collate and make public this really true statistically.
Another good idea from the report-CNIS also already put in place by MeilleursAgents.com (free publicity ...) and also other portals-a "reliability index" prices could be set up and should then be taken the various barometers, such as the Federation Nationale de l'Immobilier (FNAIM) or that of notaries is however very difficult, one might say, because it would mean, probably, he noted, and themselves quality of their work? It is true that the government aims to work on the reliability of real estate is obviously right. "The purpose is mainly to have more results for" assigned during the weekend an adviser to Secretary of State for Housing. We observe ourselves, if I may, that the press has continued, particularly in the latter period marked by the crisis, trying to clarify by actual survey field prices issued by the public and private agencies expected Challenges do ... which just published its traditional spring real estate folder, uses really do this for dozens of reporters to feed its regional editions. With the result of providing its own arrays, the most recent, detailed and accurate reports in the press ...
Finally, the Secretary of State for Housing would provide according Relaxnews accompany notaries "to improve their statistical tool and dissemination of their figures. This little phrase, will probably set fire to the powder ... because this would imply that Benoist Appeared have taken sides in the recent mini-war with estate agents on the quality and / or quantity of information available on prices. Because the real problem is: these prices which are discussed are accurate? The crisis has also revealed not just poverty but the excessive wealth of statistics house prices. Between the price charged by the seller, negotiated with the prospective buyer a real estate agent and he finally signed at the Notary, after planing possibly due to the action of the banks that fund, there are obvious differences are even stronger in times of crisis. Worse, the official statistics issued by INSEE based on data supplied by the Solicitors had not really intended to say how much a home worth today - or at least yesterday, even ava, t yesterday, who are not interested really in a crisis-market, but especially how evolved the price index by type of housing in France full or better in Paris and in some cities. While the criterion of price formation as it is signed by the notary was precisely the variety and / or diversity cases ... So, the end of the crisis will certainly also marked the end of the current system ambidextrous consists mainly of Notaries prices and those of the National Federation of Estate Agents.
Last point: it seems to be concerned that the ad hoc committee convened at the request of the Minister shall not allow more convenient to communicate INSEE figures, possibly enriched with those of the FNAIM for preliminary contracts are signed before the acts? As for other stakeholders including Internet barometers or thermometers their grown, they will be asked to affix a statement indicative prices! But attention to the freedom of the press who must also (and especially) learn and teach the public with reliable data and useful!

Risk bubble on Emerging?

A bubble in emerging markets is it really fear?

It is true that global growth is driven by emerging markets, whose weight in world GDP will soon be 50%. Alongside the weighting of emerging markets in global financial markets gradually caught up, which should encourage investors from developed markets to rebalance their portfolios to benefit from these regions structurally underweight. For now, their weightings in the indices remain significantly below their weight in world GDP.

The fear of formation of a bubble has its origins in the difficulties to detect: it finds the existence of a bubble until it bursts. As Alan Greenspan said: "Currently, economists are unable to provide a strong reversal of sentiment. A collapse in confidence is generally described as the bursting of a bubble, an event that becomes undeniable to post only. "

The TMT bubble has lasted seven years, after recorded an absolute performance of over 1200%, a cumulative outperformance versus the S & P 500 by nearly 1000% (equivalent to an annualized outperformance of 39%). The Japanese bubble lasted nine years, after recorded an absolute performance of over 500%, a cumulative outperformance versus the MSCI World index by almost 250% (equivalent to an annualized outperformance of 15%). The Asian Tigers bubble lasted three years, after recorded an absolute performance of over 630%, a cumulative outperformance versus the MSCI World Index by over 600% (equivalent to an annualized outperformance of 110%).

We compared this performance with that of emerging markets between 2001 and 2007 to determine if we could describe this latest speculative bubble: the rise of emerging markets has lasted six years, after recorded an absolute performance of over 400% or a cumulative outperformance of the MSCI World index by almost 350% (equivalent to an annualized outperformance of 28%). These performances are quite close to those of a bubble, and if it were a bubble, it has already exploded. But we never saw the formation of a bubble so soon after the breakup of the former.

So you do not feel that these markets are expensive?

In terms of fundamental value, it should be noted that the ratio P / BV (Price / book value, estimated in 2010) has remained broadly in line with historical levels since 2003, compared with estimates of ROE (Return on Equity) 2010. Furthermore, compared to other regions, the emerging market valuations are not excessive given the current ratio ROE. The ratio P / BV is not only a reflection of the value creation, but also the projected growth in the long term. With a ROE equal to that of the United States, emerging markets deserve a better value. It is easy to justify the current valuation of the MSCI Emergent, given its current profitability compared to other regions and because it is based neither on growth nor a hypothetical predictive performance.

On a quantitative basis, the existence of a bubble is not justified by the level, far from excessive valuations, or the dividend yield.

Recently, the Chinese growth and higher inflation expectations have led investors to fear a cycle of monetary tightening more aggressively than expected. Despite good economic statistics more and more analysts are concerned about the situation in China. Investors pessimistic crystallize their attention on China and often compare a hypothetical bubble Chinese Japanese bubble of the late 1980s. Indeed, the Japanese case is interesting because it is the latest example of the structural development of a country that has finally burst the bubble.

Can we baptize China the "new Japan"? In terms of valuations, the PEX 2010, Chinese A shares is estimated at about 18 now, against 70 in Japan during the bubble of the 1980s.

They talk about real estate bubble in China ...

The living space of urban Chinese has increased rapidly, reaching a level close to that of Singapore or Japan (30 m2 per capita). However, property investments are expected in cities: 200 million Chinese migrant workers and renovations are needed on the flats had been built hastily in the early 1980s.

In terms of access to housing, the ratio of the average price of a home divided by the annual income of a household is 10 in China (compared to 4 / 5 in most developed economies and 18 in Japan in 1990 ). Based on income buyers, the ratio is close to that of a developed economy. The main problem is that the offer was for the premium segment while the needs of the general public are not satisfied. In 2010, property investment should remain strong, with growth in double digits. The government has taken measures to curb speculation: limit the ratio of debt buyers, improving bank risk management, increased supply of land and property in smaller cities and housing supply good market.

The risk of Chinese real estate sector is also limited by the method of financing property purchases: the price increase has been fueled by credit expansion, real estate is mostly financed by savings (1 / 4 buyers do not rely on debt).

The risk of formation of a bubble in Chinese real estate market is real but the bubble is far from being effective, it is the Chinese government to manage that risk to prevent the drift of prices. On the other hand, property values have already been corrected and a lot of negative news is already incorporated.

What concerns about the risk of overcapacity?

The risk of overcapacity is another problem China, highlighted by the most pessimistic. Investment in fixed assets accounted for 47% of GDP last year. China overinvestment and wasted it does? The country boasts of having registered the highest growth in twenty years of the variable total factor productivity (TFP). If China was as wasted as the Soviet Union, developments in productivity would be negative. Even in sectors with overcapacity, like steel, the country still operating at a capacity of 72% last year down cycle. In infrastructure, when compared with the situation in the United States a century ago, China, whose area is the same but whose population is three times greater, have 110 000 km of railways by 2010, against 400 000 in America in 1916.

Another way of looking at things is that overcapacity China affects the rest of the world. China is competitive, and markets are increasingly globalized, open a new factory in China will create excess capacity elsewhere in the world, in a country less competitive.

The main risk we identify currently China is the evolution of the U.S. dollar and the increased risk aversion, due to fears by the indebtedness of the states.

China : Container housing

The high prices of real estate in southern China are pushing people towards a solution far less expensive containers converted into homes, reported Friday's People's Daily on its website.

Whole villages of container began to flourish around Shenzhen, the metropolis near Hong Kong, where a square meter can reach 20,000 yuan (2,000 euros), said the site. In comparison, a container of 18 square meters can be rented for the year to just over 2,000 yuan.

The containers, equipped with kitchens, toilets, bathrooms and windows, its very popular among the migrant workers or students. According to the website of People's Daily, the "fashion" has been launched in cities like New York or London.

U.S. real estate, decline in housing starts

The starts of homes in the United States fell by 5.9% in February to 575,000 units against 611,000 annualized units in January, according to latest figures published by the U.S. Department of Commerce.

However, housing starts recorded in February remain virtually stable over one year (+0.2%).

As for homes permitted, the number of building permits issued in the U.S. in February fell 1.6% to 612,000 units on an annualized basis, but it remains 11.3% higher than a year earlier.

The housing market will remain convalescent professional in 2010

The time has not yet resumed and real estate professionals are still in phase of sobering after the euphoria of the years 2007 and 2008. With 18 000 visitors, the crowds at the 21st edition of the international market for real estate (MIPIM), Cannes, from March 16 to 19, was half that in 2008 a record year, and comparable to 2009.

The British and Russian delegations have been significantly reduced, the presence of the Middle East is almost symbolic and the absence of the Spaniards noticed. Attendance at MIPIM is a barometer of the health of the global real estate industry which, since 2008, acknowledged a serious decline. No resounding failure - even if the land Orco Property, very invested in the countries of Central Europe, and under the safeguard procedure, laid off 500 people - but a crisis for low noise, which undermines the morale and projects. A survey from the Royal Institution of Chartered Surveyors, conducted among 1 200 professionals, reveals that 11% of them have lost their jobs over the last twelve months.

The profession hopes that 2010 will be the year of stabilization, before restarting. The consulting firm Cushman & Wakefield predicts for 2010, a rebound of 30% investment in the world is 478 billion dollars, against 362 billion in 2009, a performance especially indebted to Asia. In France, twenty investors surveyed by Investment Property Data in February that provide 11 billion euros will go this year to commercial real estate (cons 7.6 billion in 2009 and 27 billion in 2007). For it is not money that is missing, as in some investors and banks, which begin to pay a reasonable to very low rates and up to 60% of the value of buildings (75% against it two years ago). The insurers have capital to invest. This is the case of Olivier Piani, Allianz Real Estate Europe, said that having 2 billion euros to invest in France, Germany and Italy. It would be acquiring the entire property Capital 8, former head of EDF in the 8th arrondissement of Paris.

UNCERTAINTIES

The fund manager AEW Europe has 3.5 billion euros and UFG 700 million euros, while German open funds themselves, collected 3.2 billion euros net. "The downside is that all these players looking for the same thing: beautiful buildings well located and secure rents, which leads to rising prices," notes Philippe Depoux, Property Manager of Generali France. The money is there, then, but not the love of risk.

Owners of office buildings, concerned about securing their future revenue, were granted to tenants of rent rebates and still expect to decline in 2010, about 7% after 15% in 2009. The concern is shared about the premises, some tenants accuse declines in sales of 10%.

Uncertainty equally among bankers, some not recover their bets in the volume of funds they have in recent years, awarded to real estate (970 billion euros across Europe). These "distressed assets" are present in Spain, looming in the U.S., but still rare in France.

The Fed keeps its interest rates at historically low

The U.S. central bank (Fed) announced Tuesday, March 16 in a statement it had decided to keep its key rate in force for fifteen months, almost zero, indicating that she also thought to keep rates "very low "For a long time. The central bank confirms the statements of its chairman Ben Bernanke, who spoke of before the House of Representatives February 24, an extremely low rate maintained on a "long period".

"The information received since suggest that economic activity continues to increase and the labor market is now stabilizing, however, noted the Fed, showing more optimism than before. Despite improvements in the U.S. economy, the central bank believes that a rate "extremely low" is likely to reassure markets. Shortly after the announcement, the Dow Jones actually off again on the rise.

The central bank also confirmed that it had completed by March 31 its programs to buy back shares to support the housing market. This mechanism was set up after the bankruptcy estate agencies Fannie Mae and Freddie Mac. The Fed has not indicated its intention to make further acquisitions if necessary, as some analysts lend him for.

Transport boost property market

The Chamber of Notaries interdepartmental Tuesday presented a study on real estate. Before the arrival of the E line, the effect tram is already in Toulouse.

The Chamber of Notaries interdepartmental presented on Tuesday showing the property in 2009 in Haute-Garonne. "Buyers are more anticipated arrival of the underground line B in Toulouse that the tramway. However, work on line E is beginning to have an effect on property prices ", explains Philippe Pailhes, notary at Toulouse.

Increasingly, the construction of the tramway in fact interested buyers. The Chamber of Notaries moreover observed price increases of 1% in the area of the racecourse, while almost everywhere else in Toulouse, the value per square foot is down.

"An apartment costs an average of 7% less than in 2008 in Toulouse," said Michel Farges. Even if the neighborhoods near a station on line B have lost some of their value in 2009 - "mainly because they were overvalued at the arrival of the subway," says Philippe Pailhes - evolution prices in ten years to beat all records.

Thus, the price per m2 of old apartments in the neighborhood Izards Lalande fell 7% in 2009, but jumped 319% in ten years. A house in the former is sold on average 301 400 euro, not far ahead of the residential area of Côte-Paved, where the average price is 335 800 euros. The Saint-Exupery-Lespinet not served by subway and tram future, loses, in 2009, 18% on the price per m2 for an apartment old.