The Underlying Factors of the Property Crisis - A Matter of Valuation

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

1.1 Background of the Study1

1.2 Problem Statement1

1.3 Significance of the Research Study2

1. 4 Conceptual and Theoretical Framework3

1.5 Research Aim and Hypothesis6

1.6 Research Objectives6

1.7 Rationale for the Research Area Chosen6

1.8 Limitation of the Research7

REFERENCES8

APPENDIX13

Questionnaire13

CHAPTER 1: INTRODUCTION

1.1 Background of the Study

Early investigation in the property literature has revealed the stringent necessity of an accurate valuation tool in the property market. Interest into this matter has increased along with the attention towards the underlying reasons behind the crisis in the real estate sector. On the setting of the current global financial crisis and considering the major differences involving valuation across the world, it has become of key interest to address the present role of property valuation, its applicability and appropriateness, as well as the way it is perceived by the key players in the market, namely property investors. The recession of 2008-09 will go down in world economic history in its intensity and be the first truly global economic crisis. A key feature and differential part of the recent crisis is the fundamental role that overvaluation of the real estate asset prices has played in the process weakening the banking system and the international transmission problems finance and credit (Herring, 2003, pp, 217-29). This research work presents a synthesis of the factors determinants of the global financial and real estate fundamentals. The second part presents an analysis of the literature obtained from different online data bases and libraries. The third section will be presenting methodology of the data and information gathered for the analysis, the fourth section contains a discussion of the effect of the economic crisis on the economy as a science.



1.2 Problem Statement

There is no doubt that United Kingdom was one of the first states of Continental Europe to be punished by the crisis in the housing market from the United States. However, it is not as obvious to say - as some analysts were having a second thought - that the market will undergo corrections "severe and painful" in most of the countries around the world. Indeed, prices are still on the upside, making it unlikely an impending real estate crash. Only a slowdown in house price was observed. In any case, it was reported a reduction in tariffs.  The answer to this question is no. According to latest statistics released by the Ministry of Housing, the acquisition of a property now costs 4% more than a year ago. Certainly, the Spanish real estate sector has experienced periods of exceptional growth over the past decade (8 to 10% annual). The construction and real estate was even the principal engine of economic dynamism of the country. However, a slowdown of rising prices is not necessarily synonymous with brutal downturn. By cons, it is quite possible to talk about the housing crisis to designate the period of the boom years, citing the fact that the construction and real estate has exploded to meet a major need of dwelling units that sorely ...