Mumbai property prices: Destined to keep climbing higher?

The era of rising prices has well and truly descended upon us.

As if an increase in excise and service taxes were not enough, an expert committee from the urban development ministry has recommended increasing property taxes to finance urban infrastructure during the 12th Five Year Plan, according to a report in Business Standard.

The committee, which estimates Rs 40,000-50,000 crore will be required over a period of less than 20 years to create urban infrastructure, recommends raising property taxes on properties given for rent rather than self-occupied units.

speculators, who, by snapping up properties all over the place and hoarding them, refuse to let prices come down, continue to sit pretty.AFP

While that is just a recommendation, it suggests the central government is not done trying to think of new ways to garner tax as it attempts to scrape funds for developing the country’s desperately-needed infrastructure.

While, in theory, the idea is admirable for its intent to boost urban infrastructure, the reality is that in cities like Mumbai, higher property taxes will make already unaffordable houses even more out of reach for the aam aadmi.

In fact, in Mumbai, the country’s most expensive real estate market, the municipal corporation is already planning to change its method of calculating property tax, currently based on rent, to one based on market price (which will raise property taxes significantly). According to a DNA story, the new tax system, in the works for a few years now, will be introduced with retrospective effect from 1 April, 2010, whenever it is passed.

That might have some implications on rents as well, if home owners decide to recoup some of those higher property tax charges from their tenants.

That’s on top of a flat stamp duty of 5 percent on all purchases within municipal corporation boundaries  imposed by the Maharashtra state budget late last month. That, along with a hike in taxes on building input costs in the state Budget, and a service tax hike on property purchase and commercial lease transactions in the Union Budget, will raise the overall cost of buying property, according to this Moneycontrol report.

No wonder property transactions are slumping. Property transactions (sale and purchase of residential and commercial properties) in Greater Mumbai during January-March declined an average of 14.8 per cent, compared to 9.11 per cent during the corresponding period of the previous year, according to a Business Standard report. A state government official told the newspaper that higher prices, higher interest rates and higher taxes were the reasons for the slump.

And yet home prices show no sign of declining. In fact, life only seems to get tougher for people hoping to own or rent property in cities like Mumbai.

Meanwhile, speculators, who, by snapping up properties all over the place and hoarding them, refuse to let prices come down, continue to sit pretty.

At least one newspaper, The Hindustan Times, has an interesting idea for breaking the hold of these speculators: It says the central government is considering a vacant land tax to check hoarding of properties. “There is definitely a case for Maharashtra to bring this tax, for developers have been hoarding huge tracts of land in Mumbai, Pune, Nashik and other booming cities and towns of the state. In Mumbai, though, is there a case for taking this forward and imposing a tax on vacant flats?” the report asks.

Right time to buy property: Experts

New Delhi: With the country’s real estate sector still in a subdued state, sector experts think it is the right time for consumers to go for their dream homes before prices start to shoot up.

Property consultant Jones Lang LaSalle says it is still a buyers’ market in the seven metropolitan cities as absorption rate is expected to hover around 12% of the total supply. According to the real estate consulting firm, the absorption rate climbed from 11% in the first quarter of fiscal 2011 to 12.5% in the third quarter. “The primary feelers are that it will not move around much at least in the short term,” said Ashutosh Limaye, head of research at Jones Lang LaSalle.
under the spectacular economic growth India was witnessing for years until a slowdown hit India in late 2008.The current overall absorption is significant improvement from the last quarter of 2010 when less than 10% of the apartments were sold, triggering a huge correction in the otherwise torrid real estate market that was basking 
During those days, developers could have even sold hundreds of residential units even before they performed the ceremonial earth digging ceremony. No wonder, absorption rate topped 25% prior to 2009. Then it was entirely a developers market, now its a seller market, said Limaye. Tepid sales in following those quarters prompted developers to curtail supply that also helped in improving the overall apartment sale. The number of new launches have gone down as developers realised the lesser velocity in the market and they were not enthusiastic in adding supply, said Limaye.nventory is manageable as they will be sold out in eight quarters and, generally, it is considered alarming if any property lies unsold for over two years.He said about 2.5 dwelling units come in the market every year in the seven largest cities in India and developers manage to sell half of them and the rest are carried forward for sale in the next year. He said the current 
“The overall absorption is still slow, but the market is still active as there is limited supply of completed project,” said Anshuman Magazine, chairman CB Richard Ellis South Asia. He said not just first time home buyers, but an increasing number of second home buyers are keeping the market ticking.
“The stock markets are so volatile and gold is becoming expensive,” Magazine said, adding, “So people look at real estate as no other asset class has given the kind of returns real estate has given over the years.”plus properties in Mumbai. Magazine of CBRE said most of the unsold up-scale properties in Mumbai are of large-sized apartments that, too, in not so prime locations.Magazine said the New Delhi-National Capital Region, Mumbai and Bangalore will continue to attract buyers even as demand for top-end real estate market in Mumbai is slow. Currently, business is slow for high-end apartment priced at R8 crore 
Meanwhile, in the other active markets of north India, inventory situation is okay, said Mudassir Zaidi, regional director north for Knight Frank India. He said currently north India has a stock of around 140,000 apartments and is expected to be sold in four quarters as generally about 35,000 to 40,000 units are sold every quarter in the region. “Supply also keeps adding up, but consumption is also happening. So unless there is a real downturn this is very much manageable,” Zaidi said....

Investors grow confident of soft landing for China property

Property prices in China have fallen for five consecutive months, but in a strange twist the stocks and bonds of Chinese property companies have been rallying this year, as investors grow more confident the sector will see a soft landing and avoid a major bankruptcy.

The Shanghai Composite`s property subindex has gained nearly 12% this year, outpacing the 5% gain in the broader index.

Anita Yadav, managing director at the corporate bond brokerage and asset management firm SJ Seymour Group says high-yield property bonds have also rallied over the past three months and spreads aren`t as wide as they were late last year.

"Till end of last year the expectation was that there were going to be some bankruptcies, but by January this year, we realized that, yes, the market was bad, but it wasn`t going to be so bad," Yadav told CNBC.

In a report issued last month, Standard Chartered also pointed out that there were signs of hope after the drumbeat of negative news last year. "Apartment sales have improved since the Lunar New Year break," Lan Shen and Stephen Green wrote. "Developers are a little more confident about apartment sales, and price cuts of 10-20% are apparently helping to nurture demand."

On Friday, China`s largest property developer Vanke seemed to confirm a rebound, reporting a 24% increase in sales in March over the previous year. It was the second consecutive month Vanke had reported a year-on-year sales increase.

But Marc Faber, who`s been extremely bearish on China`s economy, says investors should be cautious and not read too much into recent signs of an uptick in real estate.

"I don`t think that the property market is recovering, it`s just not going down anymore, and they discounted prices and so it`s like the first drop in the share market and then there`s a rebound and then it drops again," Faber said on the sidelines of Maybank`s Invest Asia conference in Singapore.

"I think this is what`s happening in China. People say, ok, now the price is lower we`re going to buy."

Smaller vs Bigger

Some credit analysts are also warning that the sector faces judgement day as builders struggle to pay back debt. On Thursday, Standard and Poor`s cut the credit rating on Hopson Development and Glorious Property.

"We have to remember, ratings agencies are not the leading indicators, ratings agencies follow the market," says SJ Seymour`s Yadav.

According to her, the best thing for investors to do is to choose the bigger names, which have exposure to mass-market housing and projects outside the large tier-1 cities. She recommends the corporate bonds of Evergrande and Country Garden.

"We reckon the bigger players, simply because of the bigger number of projects, the diversification, will assist them. The smaller players can come under pressure very quickly," says Yadav.

Meanwhile, analysts expect further consolidation among the smaller developers. Donald Han, Senior Advisor, HSR Property Group said his firm was advising some of these smaller companies.

"A lot of these companies by in large have a fairly strong asset bases in terms of balance sheet but the difficulty is trying to move sales and converting that into stronger liquidity," Han told CNBC. "Some of the smaller companies may go through consolidation. The result of the consolidation exercise would turn some of the new entities into a bigger more stable companies."

Hong Kong arrests property tycoons

A corruption case against Hong Kong’s two richest property tycoons is a black mark on the city’s clean image and could fuel public anger over links between government and business, analysts said.

The Asian financial hub has been gripped by the arrest of billionaire brothers Thomas Kwok (郭炳江) and Raymond Kwok (郭炳聯), co-chairmen of the city’s largest property developer, as well as former senior government official Rafael Hui (許仕仁).

The Kwoks have yet to be charged with any crime but anti-graft investigators are believed to be focusing on alleged malpractices involving the developers’ huge “land bank” of rural, undeveloped property, analysts said.

The case has sent shockwaves through a city that has earned a reputation as one of the world’s most open and transparent markets, even as its growth has enriched a clique of tycoons who control everything from ports to telecoms.

Lyncean Holdings managing director Francis Lun (藺常念) said the Kwok case “reinforces the perception that there is collusion between the big developers and the government.”

“This is a black eye for the civil service,” the financial adviser said.

The Kwoks are worth an estimated US$18.3 billion and jointly chair the Sun Hung Kai Properties (新鴻基地產) group, builder of many of the tallest landmarks in Hong Kong’s glittering skyline.

The brothers insist they have done nothing wrong and the company has stood by them, but investors wiped almost US$5 billion off Sun Hung Kai’s market value the day after the arrests were made on March 29.

“There is limited disclosure on the corruption investigation, which poses a level of uncertainty as to the impact on the company,” said Moody’s, which like Standard & Poor’s has cut the firm’s outlook to negative.

The Kwoks’ Sun Hung Kai, Li Ka-shing’s (李嘉誠) Cheung Kong Holdings (長江實業), Cheng Yu-tung’s (鄭裕彤) New World Development (新世界發展) and Lee Shau-kee’s (李兆基) Henderson Land Development (恆基地產) are popularly dubbed the “Big Four” developers in the city of 7 million people.

As their wealth from land sales and development grew in the 1970s and 1980s, they expanded into other sectors such as utilities, hotels, telecommunications, supermarkets and restaurant chains.

“They control just about every profitable business in Hong Kong. They collect ransom from the people of Hong Kong, basically,” Lun said.

Chinese University of Hong Kong political scientist Ma Ngok (馬嶽) said the tycoons “have their hands in almost every sector” and influenced government policy to protect their interests.

“They are so dominant that if you try to do something to the housing market it won’t be very meaningful,” he said, referring to property prices that are among the highest in the world.

The Kwok arrests came days after a leadership vote in which a textile tycoon’s son competed against a wealthy property consultant for the approval of a 1,200-member election committee packed with tycoons and their proxies.

The winner, Leung Chun-ying (梁振英), has vowed to make housing more affordable for the middle and working classes without affecting price “stability.” He will replace outgoing Hong Kong Chief Executive Donald Tsang (曾蔭權), who last month apologized for accepting favors from his business friends in the form of trips on luxury yachts and private jets.

The bow-tie-wearing career bureaucrat, whose term expires in June after seven years as the city’s chief, appeared to hold back tears as he defended the “system” against allegations of widespread collusion.

London property

It was a similar story, he says, in the months before Silvio Berlusconi announced he would step down as Italy’s prime minister. Hordes of Italian buyers descended on London as the markets punished their home country for its political myopia.

To top-end London agents, the same pattern was evident when Greece hit the rocks economically and when a swell of discontent ushered in regime change in Egypt.

“Buying a London house has become the stock reaction. Wherever there is political or economic unease, people instinctively head for the Monopoly board of prime central London addresses,” says Mr Hewlett, head of London residential property at Savills, the big UK agency.

Favoured districts of the UK capital have become the destination of choice among investors seeking a safe place to store their wealth. The combination of a stable political environment, respected legal system and, crucially, a clear framework for property ownership has turned it into an investment lagoon in a world beset by economic and political tempests.

Liam Bailey, head of residential research at Knight Frank, a rival agency, says: “The wave of money that has been flowing into London property over the past three years has been supercharged by one key theme – political risk. The world’s wealthy, especially in emerging markets, are nervous about arbitrary rule and policy change in their home countries and how this might affect their ability to protect their wealth. So they are moving money, and increasingly their families, to more stable environments. These house purchases are effectively triple-A rated bond investments – which happen to have a London address on them.”

If homes that were once just well-located bricks and mortar have morphed into something more akin to a reserve currency, that creates a big distortion to the residential upper tier.

However, Mr Bailey is among a growing band of property experts suggesting that London’s prime market – the top 5 per cent of the housing stock by price – is barely at the start of a sustained rally, underpinned by increasing uncertainty elsewhere in the world and the resulting push towards personal wealth preservation.

The world’s stock markets have lurched about, showing little sign of finding a compass. Government bonds have come under pressure from investors who realise that sovereign debt is no longer the risk-free investment it once was.

By contrast, since losing a quarter of its value soon after the start of the 2008 financial crisis, London’s prime property market has boomed, increasing in value by 42 per cent.

That also decouples it from the wider UK housing market, which, having fallen 18 per cent in value during the first year of the crisis, has recovered by only 7 per cent.

One factor supporting prime London house prices is the scarcity of properties that are suitable in size and location. While there is plenty of stock in the capital, international buying activity is concentrated on a tiny triangle of postcode slivers that border on the south-east corner of Hyde Park. From the stuccoed canyons of Mayfair and private-gardened squares of Belgravia to the £5,000 per sq ft apartments of Knightsbridge, the demand is targeted at areas characterised by finite supply.

The upshot has been the creation of residential pockets where values bear little relationship to the underlying momentum of the market, taking on instead the sort of arbitrary worth normally reserved for precious stones or fine wines.

Mr Hewlett at Savills says: “If you look at it dispassionately, a London house is an asset that is appreciating in price in a stable environment characterised by extremely limited supply. Perhaps more importantly, people really trust the property market here. They know that if they buy it, they own it and the courts will protect that right.”

London’s attraction as a haven has greatly widened the geographic make-up of the buyer base since the start of the financial crisis. In 2008, the foreign element to the city’s prime property market comprised 28 nationalities. By last year, the figure had more than doubled to 64.

The degree of foreign interest in the market reflects what is going on in the world. Greece, for example, has quadrupled its share of buying during the past three years and now accounts for 2.9 per cent of all prime property transactions. US house-hunters, by contrast, have retreated: they make up just 2.5 per cent of the market, all but halved from 4.9 per cent in 2008.

Moreover, activity levels are growing. Sales of houses worth more than £5m – a slice of the market dominated by overseas wealth – soared 98 per cent in the first 11 weeks of this year, with transactions totalling £723m compared with £365m during the same period in 2011, according to research from Knight Frank.

But while the flight to safety is a main motive force behind London’s success, there are other reasons why demand in the top tier of the city’s housing market is thought unlikely to recede in the near future.

The location of the UK, sandwiched neatly in the middle of the world’s main time zones for economic activity, has always made London attractive to business – and those who want to be close to it.

Also helping London keep ahead of New York, Hong Kong and Paris in attracting international property investment has been the wide choice of schools, a legal system considered to be among the world’s fairest and a structure of ownership enshrined by centuries of land registry documentation.

“London has an integrity that a lot of other places don’t have,” says Amanda Staveley, a British-born banker who has become a deal-broker between Middle Eastern investors and the UK.

She worries, however, about the government’s announcement in last month’s Budget that it was to levy a 15 per cent tax on those who used company structures to buy houses. The legislation is likely to be hard felt by foreign buyers, many of whom purchase through corporate vehicles.

“The Arab world in particular has always done well out of London and it is still considered a big trophy to own a property there. But a lot of extremely wealthy people are keen to remain anonymous and use companies to hide their identity – not to avoid tax,” says Ms Staveley. “The government needs to see the prime London market for what it is: a great British success story and something they should be proud of and champion, not tax out of existence.”

Opportunities for low-risk wealth creation have also been attracting investment funds – average combined rental and capital growth returns on a £2.5m house bought on the first day of 2011 are 14.2 per cent. Anxious to get a foothold in a fast-rising market, private equity groups are starting to deploy the kind of financial muscle the usually reserve for corporate transactions.

One such company, Brockton Capital, recently bought 40 flats in a 1930s apartment block in Curzon Street, Mayfair. The group plans to convert the building into an 18-unit, ultra high-end housing project with a total value of close to £400m. The deal is typical of a host of development projects in or close to the most sought-after postcodes.

Inevitably, it is likely that at some point the market will go through another crash. There are already those who warn that the frenzy at the top of the market has all the hallmarks of a bubble. Sustained economic improvement in continental Europe would, for example, slow a vital source of money to the market. Similarly, a terrorist attack on London or any sudden political upheaval would challenge the notion that demand will always outstrip supply.

Until then, however, London’s estate agents can guarantee that their next payday will never be far away. It is just a question of waiting until the next time, somewhere else in the world, that the butterfly of uncertainty flutters its wings.

I&T@GHMC aids high property tax collections

HYDERABAD: The slew of online payment gateways and technological facilities such as EPOS devices for property tax collection has been cited as a major factor in the improved tax collections for the just-concluded financial year 2011-12 by officials of the finance department in GHMC.

Statistics provided by the corproation show that of the Rs 640 crore collected as property tax, Rs 367.43 crores has been received through EPOS handheld billing device and close to Rs 112 crore has been received via gateways such as AP Online, GHMC website online payment and e-Seva alone.

Of this total amount filed online, e-Seva has clocked the highest collections at Rs 99.65 crore, followed by GHMC Online at Rs 6.41 crore and AP Online gateway at Rs 5.52 crore. Circles 9 and 10 in the Central Zone have recorded the highest figures for all forms of payments, with combined figures of Rs 50.7 crore collected via e-Seva, Rs 2.37 crore via GHMC website Online payment, Rs 1.35 crore via AP Online and Rs 114 crore through EPOS bill collectors.

Further, the technical staff of the IT department of GHMC have disclosed an emerging trend of a number of NRIs making good use of the facility, with more than 2700 registrations being done from USA, 700 plus from Saudi Arabia and 390 from the UK, apart from a few hundred hits reported from countries like Canada, Singapore, Australia and countries in the Gulf region, which has a considerable Hyderabadi population.

Many of these property tax filings took place in the last couple of weeks prior to the closure of the financial year, claimed the staff of the IT department. An official with the finance department confirmed the same adding, “the number of hits received for online property tax payment this year was higher than last year, and was aided by the fact that many NRIs took advantage of the facility, as can be observed from the number of international hits received in the past few weeks alone.”

Property speculator pays levy 190 times

Despite nearly half the country boycotting the household tax, one property speculator paid 190 times — with a cheque for €19,000.

The payment is the biggest so far received by the Local Government Management Agency, which is responsible for collecting the levy, and covered 190 dwellings.

The agency’s chief executive, Paul McSweeney, said officials were receiving several forms a day registering upwards of 50 properties at a time as they worked through a backlog of 235,000 forms posted in or handed over to local authorities.

"We are coming across forms that contain more than one property, having on each day a single digit number of forms that contain 50 or more properties, and in one case, a form with 190 properties and a cheque for €19,000 in it."

About 8,800 registrations have been made online since the deadline passed last weekend, and all late payers will receive an €11 penalty on top of the €100 charge.

In total, 886,000 properties have been registered for the tax — 636,000 of them online, with 154,000 coming through the post and another 81,000 handed in at local authority offices.

"We expect the number of properties that have registered to grow — there are people out there who have a significant amount of property," Mr McSweeney told RTÉ.

So far, only 13,833 of those registered qualified for a waiver on the grounds of living in a ghost estate or being in receipt of mortgage interest supplement.

Despite the mass boycott of the €100 charge and severe criticism over the Government’s information campaign, Mr McSweeney said his agency’s handling of the situation had been "excellent".

Opponents of the house tax have questioned the Government’s claim that just under 1.6m properties are eligible for the charge.

They insist that the census shows about 1.8m such properties in the State, meaning that the backlash against the charge has been even greater than the Government has so far reported.

The penalty remains at €11 for the next six months, and increases incrementally from that point.

Critics of the tax, such as Socialist TD Joe Higgins, have called for non-payers to hold firm, as they say it is unrealistic for the Government to make law-breakers out of 800,000 people.

The flat rate charge, which was planned as a €160m revenue raiser, is to be replaced next year with a range of payments based on property size.

Environment Minister Phil Hogan has drawn widespread criticism for his handling of the rollout of the charge which was marred by a confused information campaign on how the tax could be paid.

Even ministers have conceded that "mistakes" were made regarding the introduction of the tax.

The Government has denied that councils with low payment levels will be "punished" with financial penalties.

People told to pay property tax in their respective Corporations

With the process of the upcoming municipal elections in full swing, the civic body on Thursday asked people to file their property tax returns in their respective municipal corporations.

Though the MCD Commissioner had proposed an increase while presenting the 2012-13 MCD budget last December, the proposal was not implemented and rates will continue to be the same as in the last financial year.

The property tax rates vary between 7 per cent and 12 per cent across eight categories for residential properties; between 10 per cent and 15 per cent across eight categories for non- residential properties; and a uniform 20 per cent for all categories listed as special non-residential properties.

The MCD stressed that property owners should file their returns “within the respective Municipal Corporation only”. People can approach their local zonal offices in order to file their current and pending property tax dues.

The MCD will offer a rebate of 15 per cent if the property tax is paid in “lump-sum in one instalment” by June. No rebates would be offered for payments made in quarterly instalments. Late payments would attract a simple interest of one per cent per month or part of the month after the due date of each quarter when tax was due.Senior citizens (60 years or more) (pro- rata basis), women, physically challenged and ex-Servicemen owning a single property up to 200 square metres covered area, which is occupied by them or being used for residential purpose, would be eligible for a rebate of 30 per cent on the property tax. If a person is eligible for multiple rebates under this head, they can avail only one rebate.Property tax returns can be filed either at the zonal MCD office or online at MCD's website www.mcdonline.gov.in and www.mcdpropertytax.in. The zones identified are City Zone, Karol Bagh, Najafgarh, Shahdara (North), Narela, Rohini, Civil Lines, Joshi Colony, Central Zone, Shahdara (South), Sadar, Paharganj and West. The MCD would be trifurcated into North, East and South after the upcoming municipal polls. Elections to all new municipalities will be held on April 15 and counting of votes will take place on April 17.

Hamptons real estate heating up again

NEW YORK — When a five-bedroom waterfront estate in the Town of Southampton went on sale in 2008 for $5.8 million, the price must have seemed reasonable. After all, second-home prices on the Hamptons, the summer playground for wealthy New Yorkers, had been rising steadily for six straight years.

But the house, ringed with mahogany decks and including a vintage pool house, finally sold a few months ago for only $2.75 million, less than half the original asking price.

"They weren't thrilled, let's just say that," realtor Marcia Altman of Brown, Harris Stevens said of the sellers. "They had turned down higher offers in the past, thinking they were too low, and they just got tired of waiting."

That may be a very good sign for the Hamptons luxury real estate market, which has been burdened for nearly four years with a glut of homes priced too high to sell.

All over the Hamptons, summer homes are starting to move again, according to more than two dozen people involved in the market, including real estate brokers, attorneys, analysts, county officials and local residents. And that is starting to show up in the figures, with pending contract sales rising for five straight months across Long Island's Suffolk County, which includes the Hamptons.

"The enthusiasm of the buyers is something we haven't seen in years," said Pamela Liebman, president of Corcoran Group Real Estate. "We still have a lot of unrealistic sellers, but they're beginning to come down and meet the market."

A number of elements are shoring up the market: Prices are being cut to levels the market can stand, the economy has stabilized, jobs growth has picked up and banks are loosening up lending. Also, foreign buyers - in particular British, Russian and South American financiers and industrialists - are adding to the buying interest coming from stars of the entertainment and sports worlds, the brokers said.

Advertise | AdChoices

One of the jewels of the U.S. eastern seaboard, the group of agrarian towns and villages about 90 miles east of Manhattan known as the Hamptons has for many years been the summer retreat for Wall Street bankers, hedge fund managers and other affluent Americans drawn to sun-splashed dunes and the tranquility of its seaside communities.

While lower bonuses for bankers and the weak performance of much of the hedge fund industry in 2011 kept interest in property deals in check, the strength of the stock and corporate bond markets so far this year is improving sentiment. An unusually warm winter has also helped, brokers said.

Prices are still depressed, but that could change this summer.

"The prices remain soft for now, but if the pending sales contract trend continues, houses will move, the inventory will tighten up and we'll begin to see a shift from a buyer's market to a seller's market," said Tricia Chirco of Multiple Listings Service, Long Island, a clearinghouse of local real estate statistics. "We're stabilizing. And after the past three years, stable is good."

Last year, there were 1,605 residential sales on the East End of Long Island, up from 1,178 in 2008, said analyst Jonathan Miller of Miller Samuel Inc.

At the market peak in 2005, there were 2,528 sales. Boldfaced names are back in the buyer's market. Pop star Jennifer Lopez is in contract in Water Mill. Dallas Mavericks basketball star Jason Kidd just closed on a $5 million home there and NBC News anchor Matt Lauer recently purchased 40 acres adjoining his Water Mill property to build a horse farm.

Down on Southampton's storied oceanfront Meadow Lane, a six- bedroom mansion sold last month for $28.5 million, property records show. Nearby, another property is in contract for $19.95 million. A 14,000-square-foot, 11-bedroom manse in East Hampton designed by Carnegie Hill architect William B. Tuthill is in contract for $24.5 million.

$8.5 million discount At the heart of the problem in the years since the financial crisis in 2008 has been the reluctant seller.

Over time, the reluctant seller "will look to blame everything else but the economy," said Westhampton Beach broker Vicky Reynolds. "First they'll blame the broker, then they will say it's not being advertised in the right places and then they'll say the appraisal is not high enough."

But there are plenty of examples of sellers starting to come to terms with big price drops over the past few years. Take 24 Ocean Avenue, a spacious, five-bedroom Dutch Colonial on three acres in East Hampton Village, one of the most sought-after enclaves on the South Fork.

With four fireplaces, a gunite pool, sunken tennis court and a refurbished carriage house, the home premiered on the market on March 17, 2008, for $18.5 million, according to records.

By the following January, the price had dropped to $15,995,000 and within six months fell again to $13,500,000 in June 2009. In early 2010, the property was taken off the market and relisted in March for $12,500,000. A year later, the owners took it down to $9,999,000, where it still sits, unsold.

"It's pretty common that when sales are really high, rentals are a little soft and vice-versa - it's the same audience," she said. "We did more rentals after Bear and Lehman fell, but the total value of the sales was lower."

The Hamptons rental market, though, has remained relatively stable throughout most of the downturn, meeting the needs of those who weren't ready to buy in a troubled market. But that may taper off as sales grow, said Judi Desiderio, president of Town and Country Realty in East Hampton.

Renting a beachfront home in the Hamptons this summer can cost anything from $3,000 for a small cottage on the dunes in Westhampton Beach for the month of August to nearly $500,000 for the same period for a 12-bedroom oceanfront compound in Southampton. Some rarified properties known to only a few top brokers can go for as much as $1 million a month.

Foreign money The Village Latch, one of the Hamptons most postcard perfect inns, located in the heart of Southampton Village, is on sale for a cool $19 million. Of the recent prospective buyers, one stood out - an all-cash bid from a Chinese woman married to a British financial industry titan.

The couple met while stationed in London, worked together in Hong Kong and were recently re-assigned to Manhattan. The bid fell short, but the buyers were typical of an influx of foreign money into the Hamptons market, said broker Enzo Morabito, an executive vice president at Prudential Douglas Elliman.

"When we talk international buyers, in my experience, we are talking mostly the United Kingdom," said Desiderio. "And we're seeing a lot of people who still live in England but will summer out here. The UK contingent is mostly from the financial sector. But the majority, more than three-quarters of our business is still mostly New Yorkers."

Ironically, a recovery in the property market here may be unfolding just as a fiscal crisis slams the local authority for the Hamptons area - Suffolk County - listed in 2008 by Forbes magazine as the fourth-richest county in America. Like many counties across the country, Suffolk's budget has been hit with falling revenue from sales tax collections and higher expenses, as public-sector pension costs rise.

Last month, Suffolk County Executive Steve Bellone declared a state of fiscal emergency following the release of a report that calculated a $530 million budget shortfall over three years. Property tax value in Suffolk County has declined 16 percent since 2008, according to county officials, and a New York state property tax cap of two percent or the rate of inflation - whichever is lower - prevents the county from driving much revenue through property tax increases.

But the indirect effects of a bolstered Hamptons real estate market could be significant. When the property sector is buzzing so is the local economy, whether it is retail sales, local restaurant bookings or jobs for those renovating houses, doing landscaping or providing a myriad of home-related services.

Cottage industry The glut of unsold homes has even given rise to a cottage industry called home staging, in which interior designers visit sale homes and rearrange furniture and artwork, hang new drapes, offer color consultations and "declutter" entire rooms.

Allegra Dioguardia of Styled and Sold, one of the top home-staging firms in the Hamptons, said the business took root in 2008, when she moved to the East End.

"I had home sellers calling me, saying ‘help!' They're frustrated. They just keep seeing price reduction after price reduction. They're desperate." Dioguardia, with degree from the Parsons School of Design, charges from $400 for a two-hour walk-through consultation in which she advises sellers on how to redesign their home themselves, to $25,000 to fully furnish an empty, 3,000-square-foot home. "People will tell me, ‘we just reduced the price by $50,000 and we can't afford to stage it,'" Dioguardia said. "And I'll say, ‘call me before you do that again!'"