The most expensive home in the world is rapidly becoming cheaper

The clouds are gathering over Britain to the extent that, as wealthy investors are turning away from the real estate market. Prices in this market in October fell for the first time in two years. Millions of homeowners are concerned about this fact, especially given the increased rates on loans and refinancing of more stringent conditions. The October drop in prices of 0.1% reported by a real estate website Hometrack, followed by stagnation in September. Observers expect that the estimates of other experts would be even worse. Last month, the average property prices fell in nearly all regions except the Midlands UK, where they simply froze. However, some experts believe it is just the correction after follies of recent years. According to optimistic forecasts, price increases will slow and will continue to slow. Has fallen dramatically the demand for new buildings of Central London, realtors expect falling prices in the South-West, East Anglia and the Cotswolds, Norfolk, Suffolk and Kent. People who purchased real estate steadily growing in order to secure a peaceful old age, now devoid of peace. In recent weeks, more and more insistently sounded warnings that the Foggy Albion can not avoid the fate of the United States experiencing the most severe recession in 16 years. Cash flow to the primary market in London is projected to fall in 2007 by 60%, to 2 billion pounds. This will cause at least a 6-month fall in prices in Central London, promises to realtors who specialize in selling luxury real estate value of £ 1 million. Today's news fit well into the overall picture sketched in the report of the IMF: IMF experts say overheated UK market by 40%. Most of the current situation - that experts agree - expensive real estate sector will suffer, as will be reduced speculative buying (when bought second or third property for sale or lease). Financiers, lawyers and other investors, frightened by the crisis, have exchanged the property with its falling returns on hedge funds. However, despite the difficult situation in the credit sector, and five consecutive increases in interest rates during the year, the prospects for the UK market in the long-term forecasts do not look as bleak as you might think. Economists believe that price cuts will last until early 2008, and then the market will recover and again grow at an impressive pace: by 2010, annual growth should be around 7%, due to an imbalance of supply and demand. Commercial real estate market is also the conclusion of funds: Many investors have followed the advice of financiers to transfer the money into other sectors. Yield on commercial real estate market, including shops, offices, industrial buildings, fell in September by 1.2%. This is the first decline since December 1992 and the largest monthly decline since 1989 - was the beginning of the previous recession, which lasted until 1991. Bank of England also warned last week that in this sector is expected to instability caused by problems in financial markets in general. The securities of companies in this sector this year has dropped in price by 26%. According to estimates of the investment bank Morgan Stanley, stocks of companies such as Land Securities and British Land, in the implementation of the most gloomy scenario may fall another 32% in 2008. At best, these papers will be decreased by 9% and will continue to fall in the price of 3 more years. Some other analysts are saying about the inevitable fall in this sector by 12% annually over the next three years and possibly up to 20%. This situation was an unpleasant surprise for investors who invested millions of pounds in the commercial real estate sector: in the last three years they have come to expect returns on their investments no less than 18.5% per annum. Meanwhile, profitability of the two largest funds - Norwich Property Trust (4 billion pounds) and New Star Property (£ 2 billion) - has already fallen this year by 8.2% and 7.9% respectively. According to open statistics, in August of this market has come 284 million pounds of new investment, but 201 million is derived from it. Market participants and independent observers are concerned that the market is people who have invested all their money is in commercial real estate sector. And did it in the past two years, when the market was clearly at its peak. Such behavior is typical for most fans, who always bought at the peak and sell on the decline, losing heavily in this market and obvalivaya rapid exit from it. Clearly, many experts caution to keep from the sale will now have the opposite effect. Most likely, the majority of investors rush to sell more quickly, which can only worsen the situation. Now, if you follow the recommendations of analysts, it is better not to hold in this troubled sector of more than 10% of their money. However, those who entered the market recently, it should be remembered that the commercial real estate - long-term investment, which in the long term (10 years) still bring a handsome profit. However, as with any long-term investment in real estate. Source: The owner, by Olka Kucherov