REAL ESTATE MARKET NEWS
UK Treasury Scares Foreigners
The tax on foreign capital proposed by the UK Treasury may negatively affect the country's real estate market. According to the Treasury's proposal, as reported by The Financial Times, the tax should apply to British assets owned by non-residents.
The proposal has already sparked discontent among wealthy foreigners and their tax advisors. The new tax is expected to trigger a mass sale of property and securities. The consequences of introducing the new tax may become apparent as early as spring 2008.
Meanwhile, according to a study by Savills, by June 2007, the share of housing worth over £4 million ($8 million) purchased by non-residents was more than 70%. Over half of the luxury housing (worth £1 million and above) in central London is owned by foreign buyers.
As previously reported, only one in six entrepreneurs in the UK with an income of over £10 million per year pays income tax. The annual amount of uncollected taxes due to evasion is about £2 billion.
US Home Prices Falling Rapidly
In the third quarter of 2007, the United States recorded the fastest rate of home price decline in 20 years. This was reported by Bloomberg citing a report published by S&P/Case-Shiller.
On average, the cost of residential real estate for the period January-September of the current year decreased by 4.5% compared to the same period in 2006. In twenty US metropolitan areas, home prices fell by 4.9% year-over-year to September 2007.
Earlier it was reported that due to the US housing market crisis, existing home sales fell by 19% to a low set in 1999. New home sales fell to their lowest level in seven years.
According to experts' forecasts, the value of US real estate will decline by a total of $2 trillion to $4 trillion. The economies of 361 US cities are expected to lose a total of $166 billion.
Moscow's Most Expensive Small Apartment Sold
A small apartment with a total area of 12.9 square meters in the north-east of Moscow in Izmailovo was sold for $93,000 - at the price of business-class housing. The square meter cost the buyer about $7,000. This was reported by RIA Novosti citing a statement from a representative of a real estate company.
As the agency clarifies, the buyer of the small apartment was a single Muscovite over 40 years old. The new owner intends to rent out the apartment and, after the demolition of the building, obtain a new, larger apartment. According to experts, the owner's net income could exceed 50%.
The small apartment, which attracted interest from 270 buyers, is located in an ordinary five-story brick building. The living area is 8.8 square meters, and the kitchen occupies 3 square meters. At the beginning of November 2007, seven similar apartments with an area of up to 15 square meters were put up for sale in Moscow.
As previously reported, for a similar amount you can buy more attractive housing in Europe. For example, according to 1-property.ru, in Nice a one-bedroom apartment of 20 square meters costs €89,000, and in Montenegro a new apartment of 40 square meters with its own parking can be bought for €90,000.
Based on materials from Lenta.ru