Global housing woes set to worsen

The housing market worldwide faces continuing struggles, according to new data from the RICS Global Real Estate Weekly.

In China, investment in property has plummeted, with the growth rate of spending falling from 33% in early 2008 to 25% this month. The real estate climate index dropped 1.5% in October compared with the previous month and is 6% lower than a year earlier.

House prices in China have also dipped, with annual gains in sales falling from 1.4% last year to 0.2% this year. However, central government construction spending has increased steadily, with the recently announced $586bn public works programme set to partially offset the decline in fixed-asset investment from the private sector.

In Australia, housing starts are set to slow, with data from the second quarter of 2008 showing a 5% fall in housing starts since December 2007, despite the residential construction sector growing 3% in the 12 months to September 2008.

The RICS' weekly data report revealed that construction in Europe has continued to suffer, with output falling 5% since February. Spain is the worst affected country, with a 24% drop in output since December 2006 compared with a 10% decline in Germany and a drop of just 3% in France.

In contrast, there has been a hint of improvement in the US housing market, as mortgage applications have grown in two consecutive weeks and remained steady for a third. However, the industry remains pessimistic about the market, with the National Association of Home Builders' index of builders' optimism sinking to a record low of 9 in November.