USA and Europe Property Market- Why Do Real Estate Prices Fall?

Real estate taxes in USA and already in Europe will keep rising nearly everywhere for homeowners even as mansion prices are falling in many parts of United States and some of the European countries, according to press releases analysis of government data.

A key reason for that lies in - despite the downturn, the market value of millions of properties for sale still exceeds their assessed value used for tax purposes. "Some people are angry to learn this news," said Jim Todora, a realy tax assessor in Sarasota County, Fla., USA "Their home's value may have decrease, but their property tax is still going up."

Fresh evidence of the slumping property market came recently, when the National Association of Realtors noted that sales of current homes dropped in March at the highest rate in 18 years.

Real estate tax limits were passed to predict large growth during times of soaring home values. Those laws let assessments rise, slowly but steadily, until they reach market value.

Realty taxes from house owners and businesses go mostly to local governments, paying for schools, roads, police and other services. Collections raise by 7% last year to a record 377 billion of USD, although the median home price grew just 1% nationwide and fell in many places.

In the long run real estate market tax limits save house owners money. Clark County, Nevada State, USA, Treasurer Laura Fitzpatrick would possess 4800 USD in taxes on her Las Vegas mansion if it were assessed at market value. Instead, she'll pay 3000 USD "Those are big savings, even if this year my taxes decrease more than the value of my house," she says.

Ukraine - still higher and higher?

Despite of current situation in USA, and already in some of the European countries, the stable property situation still surprises us with prices growing. Some Ukrainian properties have increaed in value by 600 percent in the past three years, and prices in Kyiv, the capital, reportedly raisede by up to 25 per cent in the last two months of 2007 alone.

Real estate in Ukraine investors and people who already purchased their homes have been the big winners. But young Ukrainians and renters now find themselves taken off of the market, with no prospect of buying.

"I'm young and I lease an apartment and make pretty good money, but I can't even afford to get a mortgage," said Irena, a secretary who did not want her surname to be announced. She says -Mortgage rates are as high as 12 per cent. "Even foreigners are surprised by how expensive it already had become here."

Kyiv now bristles with cranes and building sites that work 24 hours a day, rushing to meet what appears to be an insatiable demand for new housing.

Specialists say that if you bought a decent flat for the going rate in Kyiv three years ago (just 15 000 GBP), it would now be worth 100 000 GBP, an increase of more than six-fold. Small city-centre apartments in Kyiv are now changing hands for 250 000 GBP and more.

The huge price increasing has made our country one of the most expensive places to purchase realty in eastern Europe and the former Soviet Union.
And, to add insult to injury, many of those buying a property in Ukraine are foreigners out to make fast money by renting or reselling.

The most popular area to invest into the Ukrainain property for sale are the capital of the country Kyiv, followed by Crimea (a Black Sea holiday destination) and the Carpathian Mountains.

The trigger for Ukraine's real estate boom appears to have been the country's pro-Western "orange revolution" that took place in 2004. The new President of Ukraine, Victor Yushchenko, abolished visa requirements for EU and American citizens, and let it be known that his country was open for business and trade. And now,especially when our country has become a member of WTO and is moving very fast towards NATO destination it will continue growing, experst forecast.

But foreign investors' good fortune has been local people's misery. Government buildings in Kyiv are frequently picketed by people angry about poor living conditions. "The politicians promise that something will change, but nothing ever does," said Irena.