The year 2011 was not as spectacular as local real estate experts had hoped. The only good sign that really came out of it was that home prices flattened out instead of falling as they had the previous four years. AT the beginning of 2011, hopes had been high that a real estate recovery was underway. The reality was a bit of a shock. As 2012 approached, many real estate experts were hesitant to predict a bright year due to the let down of 2011. But, 2012 has proven to be one where bright nuggets of hope have emerged in the real estate market.

The first signs of a good real estate year actually came at the end of 2011. In November 2011, pending home sales were up 7.9% over the previous month. And when compared to November 2010, it was up 5.9%. While modest, these gains were a spark of hope that real estate agents and experts were looking for.

Housing starts lead the way into the first half of 2012. Building new homes is something people want to do in Dallas-Fort Worth. Over 14,000 housing starts in the first quarter showed a promising start for the year. Most of these were starts in townhouses and condominiums, but single family homes were in the mix as well. Sales by builders were also on the rise during the first quarter. This meant that housing starts should also rise during the second quarter. Sales of existing new homes were down as the inventory of new homes on the market also fell.

Purchases of existing homes are also up in the first half of 2012. By May, the number of existing home sales was up over 3000 units from the same time period the year before. This was true in all counties in the Dallas metro region. The amount of existing home inventory steadily goes down as the glut of the past few years either goes off the market due to sales or owner withdrawal.

So, what does the second half of 2012 look like? With mortgage rates as low as they have ever been the sales of existing and new homes should continue to grow through the end of the year and beyond. While no real estate expert will say the rest of the year will have spectacular growth, most agents are cautiously optimistic that the growth seen in the first part of the year will spill over into the second part of the year. Steady growth will provide a good basis for 2013.

Indicators show that 2012 may be the start of an upward curve in the residential real estate market. The commercial real estate market is also rebounding. That is a good sign that the economy in Dallas/Fort Worth is starting to turn around. With both in hand, it is possible to see signs that the recession driven problems may be alleviating. That is good news for anyone who is looking for the right time to buy or build a new home. With low interest rates remaining, it is time to make your move.

The influence of  on the UK landscape could be said to be obvious. The appearance of the London skyline has been changed fairly significantly over the past decade or so as numerous new high rise buildings see their construction through. The ‘Shard’ building near Waterloo station is perhaps one of the most obvious new buildings, and is a project funded by the Qatar investment fund. Investors from abroad have acquired several notable properties in and around London such as Canary Wharf, and One Hyde Park, an auspicious apartment block.

A Growing Trend

This is all part of a recent trend and is by no means isolated to investors from rich middle eastern economies. Buyers from foreign markets such as China and Russia have all been turning their investment sights on the various desirable locations of central and north London. Property in this area is very highly valued and seen as almost a separate entity from property in Greater London and any areas outside the M25. In fact, the level of investment in central London office complexes outranks even New York, and has exceeded investment in Paris over the past 5 years. Levels of foreign property ownership in this hotspot have now exceeded the 50% mark.

Economic Impact

Of course, property is one of the basic assets that a business, person or country can have. At first glance the exchange of property for money seems a simple enough transaction, but a closer look reveals relatively wide ranging impacts on business and the economy. The question is, does such extensive foreign buying of UK property leave us better or worse off in the long run?

Generally, an active property market is seen as a positive thing. The immediate effect is one of raised property prices as demand increases – this leads to growth economically. However, following the economic downturn, satisfaction with this aspect of the free market is dropping. The economic crash is in many ways attributed to misguided investment in property – albeit at a more mundane level than large scale foreign investment. Also, though increased property prices may appear to boost the economy, for ordinary people with average incomes, the increased difficulty of buying into the property market due to inflated prices can cause a decrease in living quality as more wages are channelled into mortgage payments. This can also have an impact on small businesses in terms of rental and start-up costs. Properties in central London are mostly affected, price changes do tend to filter down to the rest of the country.

A potential problem associated with large scale property sales to foreign investors is that valuable City property is by definition not a renewable resource. While buyers in the UK invest in plenty of foreign goods, many of which are consumables, property investors receive a long term freehold. The long term impact on the UK economy depends on the proper handling of this potential imbalance – money from sales and capital gains taxes will need to be wisely used to increase value in the UK economy.

Written by John Parker, property blogger from the UK with a special interest in the London prime real estate market.