Recession is sweeping over all countries across the globe and is causing a cascading effect on other markets.  Crumbling stock markets and failing banking industry have lead to a huge economic crisis. In this scenario the real estate sector is the worst affected as there are no takers for the homes as all funding channels have dried up. Mounting foreclosures and job losses are adding to the grim situation all over the world.  According to RBA Governor Glenn Stevens world financial markets have remained turbulent both locally and globally over the past month.  Australia’s Reserve Bank has lowered the interest rates by more than 75 basis points for the third time in the last three months.  This is said to be the most aggressive policy decisions since the last time recession hit in the early 90s.

As an aftermath of the mortgage meltdown and sliding home prices, the US real estate market is caught up in a recession nationwide says the latest analysis by the Housing Predictor. It has predicted estimates that more than 250 local housing markets are in the grip of recession. The other markets are in a position to escape the recessional state because of their stronger lending practices and standards in these communities. The sub prime crisis is blamed as the reason behind the collapse of the financial markets. 5 million adjustable rate mortgages will face adjustments over a little more than the next two years.

In an attempt to infuse confidence in the people’s mind the Federal Reserve has announced cut in the interest rates and are keen to announce further cuts.  This is aimed at limiting the disastrous effect of the real estate recession as this crisis is the most unprecedented in the US history that could make the economy to suffer the worst national economic turmoil than in the years of the great depression during the 1930s. The real estate market crisis is the result of the unethical and greedy mortgage lenders, brokers and builders.  Mortgage companies continuously developed several newer and creative mortgages flouting the lending guidelines.  When the real estate markets were booming, the first time home buyers took advantage of the situation to get their mortgages. The Federal government’s failure to impose restrictions on the sub prime mortgages is also stated as one of the reasons for this real estate recession. Due to this the home prices have fallen by 40 to 50 percent of their peak prices in some areas.  It gained momentum in the early 1990s.

The Asia Pacific real estate market also is witnessing major impact of the global economic meltdown.  This is characterized by office space leasing declining and vacancy rates shooting up according to global realty consultant Jones Lang LaSalle.  The financial crisis in Asia Pacific has begun to affect the occupancy market for the major financial office centres. The leasing activity has been on the decline for several quarters in cities including Tokyo, Sydney, Singapore and Hong Kong, says the latest report of JLL. The report further says that the economic impact on real estate fundamentals are hitting gradually in Europe than in the Middle East and North Africa or Asia Pacific.