Real Estate - Latest real estate developments, mortgage and lending watch

Guardian.co.uk: Property market hasn't collapsed because banks can't face the truth, by Ruth Sutherland, Lenders are still extending credit to commercial developers because they simply can't afford to crystallise their losses, Nov. 22, 2009

"Commercial property is the dog that didn't bark in this recession. There were widespread expectations of carnage in the market; although there were sharp falls in values earlier on, this has so far not materialised. Quite the contrary in London prime property, which shows every sign of blowing up into a new bubble. But it doesn't take the deductive powers of Sherlock Holmes to work out what is going on – and the banks, inevitably, hold the key to the mystery.

The first thing to say is that the boom in prime London real estate gives a misleading picture of the market as a whole, as does the strong recovery in the shares of big listed companies like British Land, Hammerson and Land Securities.

Activity in the capital is being driven by overseas buyers taking advantage of the weak pound and financing transactions with equity capital, not debt. It is being stoked by a shortage of supply, with an estimated £7bn of capital chasing half a billion's worth of desirable property for sale." read more

The prime property market in London is a market segment per se. Even though the rest of the market has not recovered yet, the price appreciation of prime property does not necessarily have to lead to a new bubble. Prime property is scarce and it can be an attractive investment in the longer term.

In contrary to US residential property where we do not see a shortage of supply in many regional markets. Consequently, prices and rents are still under pressure:

Macroblog of the Atlanta Fed: Housing back in the news, Nov. 20, 2009